UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K


            /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2004

                                       OR

          / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

               For the transition period from ________ to ________

                        Commission file number 333-17795

                            WATERFORD GAMING, L.L.C.

             (Exact name of registrant as specified in its charter)


                 DELAWARE                              06-1465402
       -------------------------------              --------------------
       (State or other jurisdiction of               (I.R.S. employer
        incorporation or organization)              identification no.)


     914 Hartford Turnpike, P.O. Box 715
               Waterford, CT                               06385
     ------------------------------------               -----------
   (Address of principal executive offices)             (Zip Code)


        Registrant's telephone number, including area code (860) 442-4559

        Securities registered pursuant to Section 12(b) of the Act: NONE

    Title of each class            Name of each exchange on which registered
      Not applicable                          Not applicable

        Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days: Yes /X/ No / /.

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K: Not applicable.

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes / / No /X/

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common  equity,  as of
the last business day of the registrant's most recently  completed second fiscal
quarter. - Not applicable

List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K  (e.g.,  Part I, Part II,  etc.)  into  which the  document  is
incorporated:  (1) Any  annual  report  to  security  holders;  (2) Any proxy or
information  statement;  and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the  Securities Act of 1933.  The listed  documents  should be clearly
described for identification  purposes (e.g.,  annual report to security holders
for fiscal year ended December 24, 1980). - Not Applicable



<PAGE>



                            WATERFORD GAMING, L.L.C.
                               INDEX TO FORM 10-K



                                                                            PAGE
PART I

ITEM 1.     BUSINESS                                                           1
ITEM 2.     PROPERTIES                                                        13
ITEM 3.     LEGAL PROCEEDINGS                                                 13
ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS               13

PART II
ITEM 5.     MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                STOCKHOLDERS MATTERS                                          14
ITEM 6.     SELECTED FINANCIAL DATA                                           14
ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS                 15
ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK        27
ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                       27
ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                ACCOUNTING AND FINANCIAL DISCLOSURE                           27
ITEM 9A.    CONTROLS AND PROCEDURES                                           27

PART III
ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                28
ITEM 11.    EXECUTIVE COMPENSATION                                            29
ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT AND RELATED STOCKHOLDER MATTERS                    29
ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                    30
ITEM 14.    PRINCIPAL ACCOUNTANT'S FEES AND SERVICES                          31

PART IV
ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
                REPORTS ON FORM 8-K                                           32

Signatures                                                                    37



<PAGE>

                       CERTAIN FORWARD LOOKING STATEMENTS

This annual report on Form 10-K contains "forward-looking statements" within the
meaning  of  Section  27A of  the  Securities  Act  of  1933,  as  amended  (the
"SECURITIES  ACT") and Section 21E of the  Securities  Exchange Act of 1934,  as
amended (the "EXCHANGE  ACT"),  including,  in particular,  the statements about
Waterford  Gaming,  L.L.C.  (the "COMPANY"),  Trading Cove Associates  ("TCA" or
"TRADING  COVE")  and the  Mohegan  Sun  Casino's  (the  "MOHEGAN  SUN")  plans,
strategies and prospects. Although the Company believes that such statements are
based on reasonable assumptions, these forward-looking statements are subject to
numerous factors,  risks and uncertainties  that could cause actual outcomes and
results to be materially  different from those projected.  These factors,  risks
and uncertainties  include, among others, the risk factors described below under
the heading  "Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations - Risk Factors" and the following:

a) the financial performance of the Mohegan Sun;
b) changes in laws or regulations (including, without limitation, gaming laws or
   regulations);
c) the effects of new  competition;  and d) general domestic and global economic
   conditions.

The  Company's,   TCA's  and  Mohegan  Sun's  actual  results,   performance  or
achievements could differ materially from those expressed in, or implied by, the
forward-looking  statements contained herein. The Company can give no assurances
that any of the events anticipated by the forward-looking  statements will occur
or, if any of them do, what  impact they will have on its results of  operations
and financial condition.  You are cautioned not to place undue reliance on these
forward-looking  statements,  which  speak  only as of the  date of this  annual
report on Form 10-K.


                                     PART I

Item 1. BUSINESS

A. THE COMPANY

The  Company  was formed  solely for the  purpose  of  holding  its  partnership
interest in Trading Cove Associates, a Connecticut general partnership.  Trading
Cove is the former manager and original  developer of the Mohegan Sun located in
Uncasville,  Connecticut,  a casino  owned by the  Mohegan  Tribe of  Indians of
Connecticut (the "MOHEGAN TRIBE" or the "TRIBE").  The Company's interest in TCA
is its principal asset and source of income and cash flow.

Trading Cove developed the Mohegan Sun and managed the property from its opening
in 1996 until  December 31, 1999.  On January 1, 2000,  Trading Cove turned over
management  of the Mohegan  Sun to the  Mohegan  Tribal  Gaming  Authority  (the
"AUTHORITY").  TCA and the  Company's  principals  assisted the Mohegan Tribe in
obtaining  federal  recognition,  negotiating the tribal-state  compact with the
State of Connecticut,  obtaining numerous governmental  approvals,  raising debt
financing for the initial  construction  and development of the Mohegan Sun, and
developing the Project Sunburst expansion (the "PROJECT SUNBURST EXPANSION"), an
approximately  $1.0  billion  expansion  at the Mohegan  Sun, the final phase of
which opened in June 2002.

The Company is a wholly owned subsidiary of Waterford Group, L.L.C.  ("WATERFORD
GROUP").  The Limited  Liability  Company  Agreement  of the  Company  (the "LLC
AGREEMENT") is effective  until  September 30, 2020 and may be terminated by the
Company's  sole member or upon the occurrence of certain events as stated in the
LLC Agreement.

The LLC Agreement provides for the property, affairs and business of the Company
to be managed by a four-member  Board of Directors  (the "BOARD OF  DIRECTORS"),
which consists of two directors  appointed by Slavik Suites, Inc. ("SLAVIK") and
two directors appointed by LMW Investments, Inc. ("LMW"). A quorum for the Board
of Directors  requires all four members.  LMW and Slavik  initially  contributed
capital  to the  Company  consisting  of all of their  respective  interests  in
Trading Cove.

Prior to the  offering of the  Company's  $65 Million  12.75%  Senior Notes (the
"12.75%  SENIOR  NOTES"),  Slavik  and LMW were  partners  of Trading  Cove.  In
connection with the formation of the Company, Slavik and LMW each contributed to
the Company its  interests in Trading Cove in exchange for a 66-2/3  percent and
33-1/3  percent  ownership  interest,   respectively,   of  the  Company.   Upon
consummation of the offering of the 12.75% Senior Notes, (i) $6.7 million of the
proceeds of such offering were distributed directly to Slavik for the purpose of
redeeming  certain ownership  interests in Slavik,  and (ii) $3.3 million of the
proceeds were  distributed to LMW, which in turn loaned such proceeds to Len and
Mark Wolman,  as individuals,  who used such funds to purchase certain interests
in Slavik.  The Company used $10.6  million of the proceeds from the offering of
the 12.75% Senior Notes to purchase RJH Development  Corp.'s ownership  interest
in  Trading  Cove.  As  a  result  of  these   transactions   (collectively  the
"REORGANIZATION"),  Slavik and LMW owned 67.7967  percent and 32.2033 percent of
the Company,  respectively. The Company is a managing general partner of Trading
Cove. As a result of the  Reorganization,  the only two partners of Trading Cove
are  the  Company   and  Kerzner   Investments   Connecticut,   Inc.   ("KERZNER
INVESTMENTS"), formerly Sun Cove Limited.


                                        1

<PAGE>

In  connection  with the  issuance on March 17, 1999 of the $125  Million  9.50%
Senior  Notes (the "9.50%  SENIOR  NOTES"),  each of Slavik and LMW  contributed
their  respective  interests in the Company  concurrently  to  Waterford  Group.
Waterford  Group is now the  sole  member  of the  Company.  Slavik  and LMW own
Waterford  Group in the same  respective  interest  as they had in the  Company,
which are as follows:



Slavik Suites, Inc.                         67.7967%
LMW Investments, Inc.                       32.2033%
                                          -----------
                                           100.0000%
                                          ===========


Additional  capital  contributions  may be made to the  Company  by its  member,
Waterford Group. If it is determined that the Company requires additional funds,
such funds may be loaned to the Company by its member  pursuant to the terms set
forth in the LLC Agreement;  however,  the indenture  governing the $155 Million
8.625%  Senior Notes (the "8.625%  SENIOR  NOTES"),  prohibits  the Company from
incurring  additional  indebtedness.  The LLC  Agreement  also provides that any
disputes which arise under the LLC Agreement and which remain  unresolved  after
30 days will be settled through arbitration.

LMW, one of the two members of Waterford  Group, is a development  firm based in
southeastern Connecticut.  LMW is owned by Len Wolman and Mark Wolman. The other
member of Waterford Group, Slavik, is based in Detroit,  Michigan. The directors
of Slavik are Del J. Lauria, Len Wolman, Mark Wolman and Stephan F. Slavik.

For the  fiscal  years  2004,  2003 and  2002,  the  Company  had net  income of
$13,923,694,  $3,891,633  and  $12,033,310,  respectively.  At the end of fiscal
years  2004,  2003 and  2002,  the  Company  had total  assets  of  $34,490,765,
$36,219,560 and $34,178,108, respectively.

As of December 31, 2004,  the Company  employed  one  full-time  employee and no
part-time  employees.  The  Company's  employee is not  covered by a  collective
bargaining agreement.

B. $155 MILLION 8.625% SENIOR NOTES PAYABLE:

On June 11, 2003,  the Company and Waterford  Gaming  Finance Corp.  ("FINANCE")
issued the 8.625%  Senior  Notes.  Payment of the principal of, and interest on,
the  8.625%  Senior  Notes is pari  passu in  right of  payment  with all of the
Company's and Finance's  senior debt,  and  effectively  subordinate in right of
payment to all of the Company's and Finance's existing and future collateralized
and subordinated debts.

The 8.625%  Senior  Notes bear  interest at a rate of 8.625% per annum,  payable
semi-annually  in  arrears  on  March  15th  and  September  15th of each  year,
commencing  September 15, 2003.  The  principal  amount due on the 8.625% Senior
Notes is payable on September 15, 2012.

The  Company  and  Finance  may elect to redeem all or any of the 8.625%  Senior
Notes at any time on or after September 15, 2008 at a redemption  price equal to
a  percentage  of the  principal  amount of notes being  redeemed  plus  accrued
interest. Such percentage is set forth in the following table:

<TABLE>
        <S>                                                     <C>
        If notes are redeemed                                   Percentage
        ---------------------                                   ----------

        after September 14, 2008 but
        on or before September 14, 2009                          103.551%
        after September 14, 2009 but
        on or before September 14, 2010                          102.537%
        after September 14, 2010
        but on or before September 14, 2011                      101.522%
        after September 14, 2011 but
        on or before September 14, 2012                          100.507%
        after September 14, 2012                                 100.000%

</TABLE>


The 8.625% Senior Notes provide that upon the  occurrence of a Change of Control
as defined in the  indenture  governing  the 8.625%  Senior  Notes (the  "8.625%
SENIOR NOTES  INDENTURE"),  the holders  thereof will have the option to require
the redemption of the 8.625% Senior Notes at a redemption price equal to 101% of
the principal amount thereof plus accrued interest.


                                        2

<PAGE>

Pursuant to the terms of the 8.625% Senior Notes  Indenture,  if the Company and
Finance  have any Company  Excess  Cash,  as defined in the 8.625%  Senior Notes
Indenture, on February 1st or August 1st of any year, they must use such Company
Excess Cash less all  Required  IRA True-Up  Payments,  as defined in the 8.625%
Senior Notes Indenture, and less any amount set aside for the payment of accrued
and  unpaid  interest  on the  interest  payment  date that  corresponds  to the
redemption date for which the  determination is being made, to redeem the 8.625%
Senior Notes on the March 15th or September 15th following such dates.  Any such
redemption will be made at a price equal to a percentage of the principal amount
being redeemed. Such percentage is set forth in the following table:




<TABLE>
        <S>                                       <C>
        If notes are redeemed with                Redemption Price (expressed as a percentage
        Company Excess Cash                       of the principal amount being redeemed)
        -------------------------                 --------------------------------------------

        after September 14, 2003 but
        on or before September 14, 2004                          108.625%
        after September 14, 2004 but
        on or before September 14, 2005                          107.610%
        after September 14, 2005 but
        on or before September 14, 2006                          106.596%
        after September 14, 2006 but
        on or before September 14, 2007                          105.581%
        after September 14, 2007 but
        on or before September 14, 2008                          104.566%
        after September 14, 2008 but
        on or before September 14, 2009                          103.551%
        after September 14, 2009 but
        on or before September 14, 2010                          102.537%
        after September 14, 2010
        but on or before September 14, 2011                      101.522%
        after September 14, 2011 but
        on or before September 14, 2012                          100.507%
        after September 14, 2012                                 100.000%

</TABLE>


The Company and Finance have periodically redeemed portions of the 8.625% Senior
Notes with Company  Excess Cash pursuant to the terms of the 8.625% Senior Notes
Indenture. The table below summarizes (a) the amount of Company Excess Cash that
the  Company  and  Finance  have  determined  was  available  for the  mandatory
redemption  of the 8.625%  Senior  Notes on February  1st and August 1st of each
applicable year pursuant to the terms of the 8.625% Senior Notes Indenture,  (b)
the aggregate principal amount of 8.625% Senior Notes redeemed with such Company
Excess Cash, (c) the date on which such redemption was consummated,  and (d) the
redemption price at which such redemption was made.

<TABLE>
<S>                 <C>                        <C>                      <C>                    <C>

Date                Company Excess Cash        Principal Amount of      Dates of Redemption     Price (expressed as percentage of
                    (approximately)            notes redeemed                                   principal amount being redeemed
----------------    -------------------        -------------------      --------------------    ---------------------------------
August 1, 2003        $   5,568,000              $ 1,912,000             September 15, 2003                 108.625%
February 1, 2004      $  14,534,000              $ 7,302,000               March 15, 2004                   108.625%
August 1, 2004        $  11,695,000              $ 5,025,000             September 15, 2004                 107.610%
February 1, 2005      $  12,098,000              $ 5,600,000               March 15, 2005                   107.610%


</TABLE>


In certain  circumstances,  if either the  Company or Kerzner  Investments,  the
Company's  partner  in TCA,  exercises  the  option  to buy or sell  partnership
interests in TCA, the Company and Finance must redeem the 8.625% Senior Notes.

The 8.625% Senior Notes  Indenture  contains  certain  affirmative  and negative
covenants   customarily   contained  in  such  agreements,   including   without
limitation,  covenants  that  restrict,  subject  to  specified  exceptions  the
Company's and Finance's ability to (i) borrow money, (ii) make  distributions on
its equity interests or certain other restricted  payments,  (iii) use assets as
security in other transactions,  (iv) make investments, (v) sell other assets or
merge with other companies,  and (vi) engage in any business except as currently
conducted  or  contemplated  or amend their  relationship  with TCA.  The 8.625%
Senior Notes  Indenture  also provides for  customary  events of default and the
establishment  of a  restricted  investment  account with a trustee for interest
reserves  ("IRA").  The IRA consists of an amount of funds equal to the interest
payment due on the 8.625% Senior Notes on the following  interest  payment date.
The IRA will be released  and the Company can make a permitted  distribution  to
Waterford  Group once the Leverage  Ratio, as defined in the 8.625% Senior Notes
Indenture, is less than or equal to 3.0 to 1.0.

                                        3



<PAGE>

The fair market value of the  Company's  long term debt at December 31, 2004 and
2003  is  estimated  to  be   approximately   $150,614,000   and   $163,804,000,
respectively, based on the quoted market price for the 8.625% Senior Notes.

The 8.625%  Senior  Notes  Indenture  is filed as an  exhibit  to the  Company's
Quarterly Report on Form 10-Q for the period ended June 30, 2003 (Securities and
Exchange  Commission  (the  "COMMISSION")  File No.  333-17795)  as  accepted by
Commission on August 12, 2003 and is incorporated herein by reference.

C. TRADING COVE ASSOCIATES

TCA was organized on July 23, 1993. The primary purpose of TCA has been,

- to assist the Tribe and the Authority in obtaining federal  recognition,  - to
negotiate the tribal-state compact with the State of Connecticut
        on behalf of the Tribe,
- to obtain  financing  for the initial  development  of the  Mohegan  Sun, - to
negotiate the Amended and Restated Gaming Facility Management
        Agreement (the "MANAGEMENT AGREEMENT"),
-       to oversee all  operations  of the Mohegan Sun  pursuant to the terms of
        the Management Agreement until midnight December 31, 1999, and
- to participate in the design and development of the Mohegan Sun.

The Mohegan Sun commenced  operations  on October 12, 1996.  From the opening of
the Mohegan Sun until midnight  December 31, 1999, TCA oversaw the Mohegan Sun's
day-to-day operations.

TCA's partnership agreement (the "TCA PARTNERSHIP  AGREEMENT") will terminate on
December 31, 2040, or earlier,  in accordance with its terms.  The Company has a
50 percent  partnership  interest in TCA. The  remaining 50 percent  interest is
owned by Kerzner  Investments,  an  affiliate of Kerzner  International  Limited
("KERZNER INTERNATIONAL").

TCA's sole source of revenue is payment  under the  Relinquishment  Agreement as
described below.

D. TRADING COVE ASSOCIATES MATERIAL AGREEMENTS

1 - RELINQUISHMENT AGREEMENT

On February  7, 1998,  TCA and the  Authority  entered  into the  Relinquishment
Agreement   (the   "RELINQUISHMENT   AGREEMENT").   Under   the   terms  of  the
Relinquishment  Agreement,  TCA  continued  to manage the  Mohegan Sun under the
Management  Agreement (described below) until midnight December 31, 1999, and on
January 1, 2000,  the  Management  Agreement  terminated  and the Tribe  assumed
day-to-day management of the Mohegan Sun.

Under the Relinquishment Agreement, to compensate TCA for terminating its rights
under the Management Agreement and the Hotel/Resort  Management  Agreement,  the
Authority  agreed  to pay to TCA a fee (the  "RELINQUISHMENT  FEES")  equal to 5
percent of Revenues,  as defined in the Relinquishment  Agreement,  generated by
the  Mohegan  Sun  during  the  15-year  period  commencing  on January 1, 2000,
including revenue generated by the Project Sunburst expansion.

The  Relinquishment  Fees are divided  into senior  relinquishment  payments and
junior relinquishment  payments, each of which equals 2.5 percent of "Revenues".
Revenues are defined in the  Relinquishment  Agreement as gross gaming  revenues
(other  than Class II gaming  revenue)  and all other  facility  revenues.  Such
revenue  includes hotel  revenues,  food and beverage sales,  parking  revenues,
ticket revenues and other fees or receipts from the convention/events  center in
the Project  Sunburst  expansion and all rental or other  receipts from lessees,
licensees  and  concessionaires  operating  in the  facility,  but not the gross
receipts of such lessees,  licensees and concessionaires.  Such revenues exclude
revenues generated by any other expansion of the Mohegan Sun.

Senior  relinquishment  payments are payable quarterly in arrears  commencing on
April  25,  2000  for  the  quarter  ended  March  31,  2000,   and  the  junior
relinquishment  payments are payable semi-annually in arrears commencing on July
25, 2000 for the six months ended June 30, 2000,  assuming  sufficient funds are
available after satisfaction of the Authority's senior  obligations,  as defined
in the  Relinquishment  Agreement.  See section  below  titled  "Risk  Factors -
Subordination - Trading Cove's right to receive the relinquishment payments from
the  Authority  is junior to certain  payments by the  Authority  to the Mohegan
Tribe and holders of its indebtedness."


                                        4



<PAGE>

A summary of relinquishment  payments received by TCA for 2004, 2003 and 2002 is
as follows:

<TABLE>
<CAPTION>

<S>                                     <C>             <C>             <C>
                DATE                        SENIOR          JUNIOR          TOTAL
-------------------------------------   -------------   -------------   -------------

April 26, 2004                          $   8,196,363   $          --   $   8,196,363
July 26, 2004                               8,477,030      16,673,392      25,150,422
October 25, 2004                            9,165,092              --       9,165,092
January 25, 2005                            8,712,261      17,877,353      26,589,614
                                        -------------   -------------   -------------
Relinquishment Fees for the year
 ended December 31, 2004                $  34,550,746   $  34,550,745   $  69,101,491
                                        =============   =============   =============

April 25, 2003                          $   7,433,160   $          --   $   7,433,160
July 25, 2003                               8,101,075      15,534,235      23,635,310
October 27, 2003                            8,691,811              --       8,691,811
January 26, 2004                            8,323,731      17,015,541      25,339,272
                                        -------------   -------------   -------------
Relinquishment Fees for the year
 ended December 31, 2003                $  32,549,777   $  32,549,776   $  65,099,553
                                        =============   =============   =============

April 25, 2002                          $   6,228,559   $          --   $   6,228,559
July 25, 2002                               7,104,939      13,333,500      20,438,439
October 25, 2002                            8,171,882              --       8,171,882
January 27, 2003                            7,748,971      15,920,852      23,669,823
                                        -------------   -------------   -------------
Relinquishment Fees for the year
 ended December 31, 2002                $  29,254,351   $  29,254,352   $  58,508,703
                                        =============   =============   =============




</TABLE>

The amount of  Relinquishment  Fees  reported in this annual report on Form 10-K
are based upon Revenues reported to TCA by the Authority.

The  senior and  junior  relinquishment  payments  rank  behind the  Authority's
obligation to pay an annual minimum  priority  distribution to the Mohegan Tribe
and all of the  Authority's  existing and future  senior  secured  indebtedness,
including  the  Authority's  bank  credit  facility.   As  a  result,  upon  any
distribution  by the Authority to its  creditors in a  bankruptcy,  liquidation,
reorganization or similar proceeding  relating to the Authority or its property,
the  priority  distributions  owed to the  Mohegan  Tribe and the holders of the
Authority's senior secured  indebtedness will be entitled to be paid in full and
in cash  before  any  senior or junior  relinquishment  payments  may be made to
Trading Cove. In addition, the junior relinquishment payments rank behind all of
the Authority's  existing and future senior  indebtedness.  As a result,  in any
such  proceedings,  the holders of the Authority's  senior  indebtedness will be
entitled  to be paid  in  full  and in cash  before  any  junior  relinquishment
payments may be made to Trading Cove.

In the event of a bankruptcy, liquidation,  reorganization or similar proceeding
relating to the Authority,  Trading Cove will receive  distributions (if at all)
on a pari passu basis with all other holders of the Authority's senior unsecured
indebtedness with respect to the senior relinquishment  payments from the assets
remaining  after the Authority has paid all of its senior  secured  indebtedness
and with all other  holders of  subordinated  indebtedness  with  respect to the
junior relinquishment payments from the assets remaining after the Authority has
paid all of its  senior  indebtedness.  However,  the  Relinquishment  Agreement
requires  that amounts  otherwise  payable to Trading  Cove in a  bankruptcy  or
similar  proceeding  of the  Authority  be paid to  holders  of  senior  secured
indebtedness   until  they  are  paid  in  full,  with  respect  to  the  senior
relinquishment  payments,  and to holders of senior secured  indebtedness,  with
respect to junior relinquishment payments,  instead of to Trading Cove. For that
reason  Trading  Cove  may  receive  less,  ratably,   than  holders  of  senior
indebtedness of the Authority in any such proceeding. In any of these cases, the
Authority may not have sufficient  funds to pay all of its creditors and Trading
Cove may  receive  less,  ratably,  than the holders of the  Authority's  senior
indebtedness.

In the event of an acceleration of any indebtedness of the Authority, the senior
and junior relinquishment payments that are not yet due under the Relinquishment
Agreement  would be effectively  subordinated  to the  Authority's  indebtedness
since the  payment  obligations  under the  Relinquishment  Agreement  cannot be
accelerated by their terms and have no blockage rights as designated senior debt
of the Authority.


                                        5


<PAGE>

If Trading Cove becomes the debtor in a bankruptcy  or similar  proceeding,  the
Company would have the status of an equity holder, not a creditor, and would not
be entitled to receive any  distributions  until all of Trading Cove's creditors
were paid in full.

If the  Authority  became the  debtor in a  bankruptcy  or  similar  proceeding,
Trading Cove's rights and recovery would depend on numerous  factors,  including
the type and outcome of the proceeding.  If the Authority ceased  operations and
liquidated,  under Chapter 7 of the Bankruptcy Code or otherwise, Trading Cove's
claim would likely be limited to the amount of unpaid  Relinquishment Fees as of
the time of liquidation.  If the Authority  reorganized  under Chapter 11 of the
Bankruptcy  Code,  Trading  Cove's claim would likely be based on an estimate of
the Mohegan Sun's future revenues for the term of the Relinquishment  Agreement.
In any event,  any  recovery by Trading  Cove on its claims for senior or junior
Relinquishment  Fees  would  be  subject  to the  prior  payment  in full of all
indebtedness senior thereto.

As a result, there is no assurance that, in the event of bankruptcy or financial
difficulty of either Trading Cove or the Authority, the Company would ultimately
recover  sufficient (or any) funds to pay amounts  outstanding  under the 8.625%
Senior Notes.

Under the  Relinquishment  Agreement,  the Authority makes certain covenants for
the benefit of Trading Cove, including the following:

(1) PAYMENTS TO THE MOHEGAN TRIBE.  Except for payments of the minimum  priority
distributions  and  reasonable  charges  for  utilities  or  other  governmental
services  supplied by the Mohegan Tribe to the Authority,  the Authority may not
make any  distributions  to the  Mohegan  Tribe or its  members  at any time any
relinquishment payments are outstanding.

(2)  AFFILIATE  TRANSACTIONS.  Except  for  payments  of  the  minimum  priority
distributions  and  reasonable  charges  for  utilities  or  other  governmental
services supplied by the Mohegan Tribe to the Authority, the Authority agrees to
abide by certain  restrictions  on  transactions  with the Mohegan Tribe and its
members, all as set forth in the Relinquishment Agreement.

(3)  REPLACEMENT/RESTORATION  OF THE MOHEGAN  SUN. If any portion of the Mohegan
Sun facilities is damaged by fire or other casualty, the Authority shall replace
or restore such facilities to substantially  the same condition as prior to such
casualty,  but only to the extent insurance  proceeds are available to do so. If
sufficient  insurance  proceeds  are  not  available,  the  Authority  will  use
reasonable efforts to obtain the required financing,  on commercially reasonable
terms, to undertake and complete such replacement or restoration.

(4)  BUSINESS  PURPOSE.  The  Authority  has agreed  that during the term of the
Relinquishment  Agreement  it will engage  only in the casino  gaming and resort
business (and any incidental  business or activity) and will continue to operate
the Mohegan Sun as currently operated.

Under the  Relinquishment  Agreement,  the  Authority and Trading Cove have each
agreed not to solicit any  employee of the other party or any  affiliate  of the
other party for five years.

With certain  limitations set forth in the  Relinquishment  Agreement,  both the
Mohegan Tribe and the Authority waive immunity from uncontested suit for certain
enforcement rights of Trading Cove arising under the Relinquishment Agreement.

The  Company's  right to receive a portion of the  relinquishment  payments from
Trading  Cove is  governed  by the  Amended  and  Restated  Omnibus  Termination
Agreement discussed below.

The Relinquishment  Agreement is filed as an exhibit to the Company's  Quarterly
Report on Form 10-Q for the period ended September 30, 1998 (Commission File No.
333-17795),  as  accepted  by  the  Commission  on  November  13,  1998,  and is
incorporated herein by reference.

2 - DEVELOPMENT AGREEMENT AND RELATED AGREEMENTS

On February 7, 1998, TCA and the Authority entered into the Development Services
Agreement (the "DEVELOPMENT AGREEMENT").  Pursuant to the Development Agreement,
TCA  agreed to oversee  the  design,  construction,  furnishing,  equipping  and
staffing of the Project Sunburst  expansion for a $14.0 million  development fee
(the "DEVELOPMENT FEE").

The first phase of the Project Sunburst  expansion,  including the Casino of the
Sky, The Shops at Mohegan Sun, and the  10,000-seat  Mohegan Sun Arena opened in
September 2001.

In April 2002, 734 of the approximately 1,200-hotel rooms in the 34-story luxury
hotel as well as the meeting and convention space and spa opened. The balance of
the  approximately  1,200-hotel  rooms opened  during June 2002. At December 31,
2004 the Project  Sunburst  expansion  was complete in terms of the  Development
Agreement.


                                        6


<PAGE>

Pursuant  to  the  Development  Agreement,  the  Authority  agreed  to  pay  the
Development  Fee to TCA  quarterly  beginning  on  January  15,  2000,  based on
incremental  completion  of the Project  Sunburst  expansion  as of each payment
date.

As of December 31, 2004,  TCA had received  $14.0  million from the Authority as
Development Fee payments.

On February 9, 1998, TCA and Kerzner International  Management Limited ("KIML"),
an affiliate of Kerzner Investments,  the Company's partner in TCA, entered into
the  Agreement  Relating to  Development  Services  (the  "DEVELOPMENT  SERVICES
AGREEMENT PHASE II").  Pursuant to the Development  Services Agreement Phase II,
TCA  subcontracted  with KIML, who agreed to perform those services  assigned to
KIML  by TCA in  order  to  facilitate  TCA's  fulfillment  of  its  duties  and
obligations to the Authority under the Development Agreement.  KIML assigned the
Development Services Agreement Phase II to Kerzner Investments.

Pursuant to the  Development  Services  Agreement  Phase II, TCA pays to Kerzner
Investments a fee, as subcontractor  (the "DEVELOPMENT  SERVICES FEE PHASE II"),
equal to 3 percent of the development  costs of the Project Sunburst  expansion,
excluding  capitalized  interest,  less all costs  incurred by TCA in connection
with the Project  Sunburst  expansion.  At December 31, 2004, all of TCA's costs
associated  with the  Project  Sunburst  expansion  had not been  paid,  however
reasonable  estimates of those costs have been  provided for in TCA's  financial
statements at December 31, 2004. The  Development  Services Fee Phase II is paid
in three  installments  - on December  31,  1999,  December  31, 2000 and on the
Completion  Date,  as  defined  in the  Development  Agreement  - with the final
payment  being made when the actual  development  costs of the Project  Sunburst
expansion  are  known.  TCA  pays the  Development  Services  Fee  Phase II from
available cash flow, if any, in accordance with the Amended and Restated Omnibus
Termination Agreement described below. The total of the Development Services Fee
Phase II and TCA's costs  related to the  development  of the  Project  Sunburst
expansion will exceed the related revenue  received by TCA under the Development
Agreement by approximately $15,964,000.

Before KIML  assigned the  Development  Services  Agreement  Phase II to Kerzner
Investments,  it entered into the Local  Construction  Services  Agreement  (the
"LOCAL  CONSTRUCTION  SERVICES  AGREEMENT")  with  Wolman  Construction,  L.L.C.
("CONSTRUCTION"),  an affiliate of the Company,  pursuant to which  Construction
agreed to provide certain of those services  assigned to KIML by TCA pursuant to
the   Development   Services   Agreement  Phase  II.  KIML  assigned  the  Local
Construction Services Agreement to Kerzner Investments.

Pursuant  to the Local  Construction  Services  Agreement,  Kerzner  Investments
agreed to pay to  Construction  a fee equal to 20.83 percent of the  Development
Services Fee Phase II as and when Kerzner Investments  receives payment from TCA
pursuant to the Development Services Agreement Phase II.

Pursuant to a Letter Agreement,  Construction has subcontracted  with The Slavik
Company,  an affiliate of the Company,  to provide  certain  services  under the
Local Construction Services Agreement.  In exchange for providing such services,
Construction  agreed that The Slavik  Company would be paid a fee equal to 14.30
percent of its fee under the Local Construction Services Agreement.

On April 26, 2000,  July 26,  2000,  January 26, 2003 and July 28, 2003 TCA paid
$3,095,000,  $1,238,000,  $6,474,000 and  $9,157,000,  respectively,  as partial
payment  of  the  Development  Services  Fee  Phase  II.  Construction  received
$644,688, $257,875,  $1,348,534 and $1,907,403,  respectively,  and Construction
paid The Slavik  Company  $92,190,  $36,876,  $192,840 and $259,121 on April 26,
2000, July 26, 2000, January 26, 2001 and July 28, 2003, respectively.

At December 31, 2004 TCA's accrued liability to Kerzner Investments with respect
to such fee was  approximately  $414,000  pursuant  to the  Development  Service
Agreement Phase II.

The  Development  Services  Agreement  is filed as an exhibit  to the  Company's
Quarterly  Report  on  Form  10-Q  for  the  period  ended  September  30,  1998
(Commission File No.  333-17795),  as accepted by the Commission on November 13,
1998, and is incorporated herein by reference.


                                        7

<PAGE>

3 - TCA PARTNERSHIP AGREEMENT

In September 1994, Kerzner  Investments,  RJH Development Corp.,  Leisure Resort
Technology,  Inc.  ("LEISURE"),  Slavik  and LMW  entered  into an  amended  and
restated  partnership  agreement  to,  among  other  things:  (i) admit  Kerzner
Investments  as a  partner  to the  Trading  Cove  partnership;  (ii) act as the
exclusive agent of the Mohegan Tribe to manage and develop an entertainment  and
gaming facility on the Mohegan Tribal Reservation; and (iii) engage in any other
activities incidental or related to the foregoing.

In  February  1995,  the  parties  entered  into an  acknowledgment  and release
agreement  whereby Leisure  withdrew from Trading Cove for all purposes,  except
that  Leisure  retained  a 5 percent  "beneficial  interest"  in  Trading  Cove.
Leisure's  beneficial  interest  is  defined  as the  right to  receive  certain
distributions of excess cash and the  organizational  and  administrative fee on
the  earlier  to  occur of (i) 14 years  from  the date of  commencement  of the
Management Agreement and (ii) the termination of the Management Agreement.

On January 6, 1998,  pursuant to the Settlement and Release Agreement  described
in Item 3 (Legal  Proceedings)  the Company  paid $5.0  million to Leisure  and,
among other things,  Leisure gave up (a) its beneficial interest of 5 percent in
certain  fees and excess cash flows,  as  defined,  of Trading  Cove and (b) any
other  claims it may have had  against  the  Company,  Kerzner  Investments  and
Trading Cove's partners and former partner.

As a result of (i) a First  Amendment  to the Amended and  Restated  Partnership
Agreement of Trading  Cove,  dated  October 22, 1996 and (ii) an  Agreement  for
Purchase and Sale of Partnership Interest,  dated September 12, 1996 whereby RJH
Development  Corp.  agreed to sell and the Company agreed to buy RJH Development
Corp.'s  partnership  interest  for  $10.6  million,  the  Company  and  Kerzner
Investments are the only partners in Trading Cove.

Pursuant to the TCA Partnership  Agreement,  Trading Cove will continue to exist
until the first to occur of: (i) December 31, 2040; (ii) a final  disposition of
Trading Cove's interest in the Mohegan Sun (or any alternative facility that may
be  developed  or  acquired  pursuant  to  the  terms  of  the  TCA  Partnership
Agreement);  (iii) the  decision of the managing  partners to terminate  Trading
Cove; and (iv) any other event which results in dissolution of Trading Cove.

In connection with its entry into the  partnership,  Kerzner  Investments made a
capital  contribution in an amount sufficient to equal a 50 percent  partnership
interest.   The  TCA  Partnership  Agreement  provides  for  additional  capital
contributions.  In the event that Trading Cove requires  additional  funds,  and
subject to unanimous approval by the partners,  the partners may make loans on a
PRO RATA basis, based on their respective partnership interests.  Such loans are
non-recourse  and  unsecured  and bear  interest  at an annual rate of 2 percent
above the prime rate.

In the event that the Company and Kerzner Investments  determine that additional
capital is required to fund TCA's  obligations,  either may make a capital call.
In the event that a capital call is made and Kerzner  Investments  does not make
the requested  additional capital contribution within 30 days, generally Kerzner
Investments is automatically deemed to have withdrawn from Trading Cove. In such
event,  Kerzner Investments is not entitled to any return of any of its previous
capital contributions or additional contributions,  but it is generally entitled
to receive repayment of any loans.

In the event that a capital call is made and the Company  elects not to make the
requested capital  contribution,  Kerzner Investments may, at its election,  pay
such  contributions,  which payment shall be deemed,  at the election of Kerzner
Investments,  to be  either  (i) a  loan  to  the  Company  or  (ii)  a  capital
contribution by Kerzner  Investments,  thereby increasing  Kerzner  Investments'
partnership interest and diluting the Company's partnership interest. The 8.625%
Senior Notes  Indenture  limits the  Company's  ability to make further  capital
contributions to TCA.

No partner is obligated to restore a capital account deficit.

The  partners  are required to bring to the  attention  of the  partnership  all
opportunities to manage or operate (1) any gaming  activities on Native American
reservations  and involving  Native  Americans or (2) any other gaming  activity
within 100 miles of the Mohegan Sun. Any such  opportunities  will be pursued by
an  affiliate of Trading  Cove,  in which the Company will not have any economic
interest.  The Company  and Kerzner  Investments  are the  managing  partners of
Trading Cove, and as such, have the full,  exclusive and absolute  right,  power
and authority to manage and control the partnership and the property, assets and
business  thereof.  All  decisions  relating to the  management  of Trading Cove
require unanimous agreement between the Company and Kerzner Investments.

The TCA  Partnership  Agreement  provides that Howard  Kerzner will serve as the
designated  representative  of Kerzner  Investments  in its capacity as managing
partner.  In the  absence of Mr.  Kerzner,  John  Allison  will serve as Kerzner
Investments' designated  representative.  Each designated representative has the
right,  power and  authority  to act for and on  behalf  of and to bind  Kerzner
Investments  with respect to all matters  relating to the  partnership.  The TCA
Partnership  Agreement  grants  Mr.  Kerzner  the right to  appoint a proxy upon
written   notice  to  the  Company.   Len  Wolman   serves  as  the   designated
representative of the Company.


                                        8


<PAGE>
In the event that a dispute  arises under the TCA  Partnership  Agreement,  upon
notice by one disputing party to the other, the parties have ten days to resolve
the  dispute.  If the dispute is not resolved in such  ten-day  period then,  in
accordance  with specific  notice  procedures  set forth in the TCA  Partnership
Agreement,  either party has the right to deliver a buy-out  notice to the other
to require such party to elect to either (i) sell their partnership  interest to
the party  delivering  the  notice  (at a price and under the terms set forth in
such buy-out notice),  or (ii) have the other party or its designee purchase the
interest of the party giving notice at the buy-out price.  In the event that the
party  receiving  the buy-out  notice fails to respond,  such party is deemed to
have agreed to sell its partnership interest to the party delivering such notice
at the buy-out price specified therein. See "Risk Factors--Risks Associated with
the Buy/Sell Option Under Trading Cove Partnership Agreement."

Subject to the following exceptions, Kerzner Investments is generally prohibited
from assigning its  partnership  interest.  Kerzner  Investments  may assign its
interest to (1)  certain of its  affiliates  and (2) to any party  making a bona
fide written  offer to purchase any or all of Kerzner  Investments'  partnership
interest if, after offering its interest to the Company at the same price and on
the same terms and  conditions as set forth in such written  offer,  the Company
elects not to purchase Kerzner Investments' partnership interest.

The Company is generally prohibited from assigning its partnership interest. The
Company may not assign its  interest  except (1) to an affiliate of the Company,
(2) to any party making a bona fide written  offer to purchase all, but not less
than all, of the Company's  partnership interest if, after offering its interest
to Kerzner Investments at the same price and on the same terms and conditions as
set forth in such written offer,  Kerzner Investments elects not to purchase the
Company's partnership interest.

Except as otherwise permitted by the TCA Partnership  Agreement,  no partner may
withdraw from the partnership without the consent of the remaining partners.  In
the event that a partner  withdraws from the partnership in violation of the TCA
Partnership Agreement, such partner will be liable to the remaining partners for
all damages caused by such  withdrawal and shall  immediately  cease to have any
rights (including rights to receive any monies) in the partnership.

The Amended and Restated Partnership Agreement of Trading Cove Associates, dated
as of September  21,  1994,  among Sun Cove Limited  (now,  Kerzner  Investments
Connecticut,  Inc.), RJH Development  Corp.,  Leisure Resort  Technology,  Inc.,
Slavik Suites,  Inc.,  and LMW  Investments,  Inc.,  and the First  Amendment to
Amended and Restated Partnership Agreement of Trading Cove Associates,  dated as
of  October  22,  1996,  among  Sun  Cove  Limited  (now,  Kerzner   Investments
Connecticut, Inc.), Slavik Suites, Inc., RJH Development Corp., LMW Investments,
Inc.  and  Waterford  Gaming,  L.L.C.  are filed as  exhibits  to the  Company's
Registration  Statement  on Form  S-4,  filed  with  the  Commission  (File  No.
333-17795)  and declared  effective on May 15,  1997,  and each is  incorporated
herein by reference.

4 - MANAGEMENT AGREEMENT

On August 30, 1995,  TCA and the Tribe  entered into the  Management  Agreement.
After  entering  into the  Management  Agreement,  the Tribe  assigned it to the
Authority.

Until midnight  December 31, 1999, TCA was the exclusive  manager of the Mohegan
Sun.

Until January 1, 2000 TCA's primary source of revenue was management  fees under
the Management  Agreement (the "MANAGEMENT Fees"). The Management Fees were paid
monthly and were  calculated in three tiers based upon Net Revenues,  as defined
in the Management Agreement, of the Mohegan Sun.

The final  management  fee was received by TCA from the Authority on January 25,
2000.

The  Management  Agreement is filed as an exhibit to the Company's  Registration
Statement  on Form S-4,  filed  with the  Commission  (File No.  333-17795)  and
declared effective on May 15, 1997, and is incorporated herein by reference.


                                        9

<PAGE>

5 - AMENDED AND RESTATED OMNIBUS TERMINATION AGREEMENT

Effective March 18, 1999, the Amended and Restated Omnibus Termination Agreement
(the "AMENDED AND RESTATED OMNIBUS  TERMINATION  AGREEMENT") was entered into by
TCA, Kerzner International,  the Company, KIML, LMW, Kerzner Investments, Slavik
and  Construction.  The Amended and Restated Omnibus  Termination  Agreement (i)
terminated  the  Memorandum of  Understanding,  dated February 7, 1998; and (ii)
effective  January  1, 2000  terminated  a) the  Amended  and  Restated  Omnibus
Financing  Agreement,  b) the Completion  Guarantee and  Investment  Banking and
Financing Arrangement Fee Agreement (the "FINANCING ARRANGEMENT AGREEMENT");  c)
the Management  Services  Agreement;  d) the  Organizational  and Administrative
Services  Agreement;  e) the  Marketing  Services  Agreement;  and  f) a  Letter
Agreement relating to expenses, dated October 19, 1996.

In consideration  for the termination of such agreements,  TCA agreed to use its
cash to pay the following obligations in the priority set forth below:

(a)  First,  to pay all  unpaid  amounts  which may be due under the  terminated
letter  agreement  and to pay certain  affiliates  of the Company and to Kerzner
Investments  a  percentage  of an annual  fee of $2.0  million  less the  actual
expenses  incurred by TCA during such year.  Such annual fee is payable in equal
quarterly  installments  beginning  March 31, 2000 and ending December 31, 2014.
For the years ended December 31, 2004 and 2003,  $1,869,157 ($934,579 to Kerzner
Investments and $934,578 to affiliates of the Company) and, $1,840,346 ($920,173
to each of Kerzner Investments and affiliates of the Company), respectively, had
been incurred by TCA in terms of the first priority.

(b) Second,  to return all  capital  contributions  made by the  partners of TCA
after  September 29, 1995.  The Company does not  anticipate  TCA making further
capital  calls  to fund  expenses  related  to the  development  of the  Project
Sunburst  expansion.  From January 1, 2000 to December 31, 2004,  these  capital
contributions aggregated $8,000,000.  From January 1, 2000 to December 31, 2004,
$8,000,000 has been repaid to the partners of TCA, 50 percent to the Company and
50 percent to Kerzner Investments.

As of December 31, 2004, $0 in capital contributions remained outstanding.

(c) Third, to pay any accrued amounts for obligations performed prior to January
1, 2000 under the Financing  Arrangement  Agreement.  All such required payments
were made during 2000.

(d) Fourth,  to make the  payments set forth in the  agreements  relating to the
Development  Services  Agreement  Phase II and the Local  Construction  Services
Agreement.  No such  payments  are  required or due at December  31,  2004.  The
accrued  liability to Kerzner  Investments  with respect to such fee at December
31, 2004 was approximately $414,000.

(e) Fifth,  to pay Kerzner  Investments an annual fee (in the form of a priority
distribution)  of $5.0 million payable in equal quarterly  installments of $1.25
million  beginning  March 31, 2000 and ending  December 31, 2006. On January 26,
2005 and on January 27, 2004,  $1,250,000 was  distributed in terms of the fifth
priority.

(f) Sixth, to pay any accrued amounts for obligations  performed with respect to
periods prior to January 1, 2000 under the Management  Services  Agreement,  the
Organizational and Administrative  Services Agreement and the Marketing Services
Agreement.  The final  required  payments  under this sixth  priority  were made
during 2001.

(g) Seventh,  for the period  beginning  March 31, 2000 and ending  December 31,
2014, to pay each of Kerzner  Investments  and the Company  twenty-five  percent
(25%) of the relinquishment  payments as distributions.  On January 26, 2005 and
January 27, 2004, $13,294,808 ($6,647,404 to each of Kerzner Investments and the
Company) and  $12,669,636  ($6,334,818  to each of Kerzner  Investments  and the
Company), respectively, was distributed by TCA in terms of the seventh priority.

(h) Eighth,  to  distribute  all excess cash. On January 26, 2005 and on January
27,  2004,  $11,600,000  ($5,800,000  to each  of  Kerzner  Investments  and the
Company) and  $10,926,597  ($5,463,298 to Kerzner  Investments and $5,463,299 to
the Company, respectively was distributed as excess cash.

In  addition,  TCA will not make any  distributions  pursuant to the Amended and
Restated Omnibus Termination  Agreement until it has annually distributed to its
partners  pro rata,  the amounts  related to its  partners  tax  obligations  as
described in Section  3.03a(1) of the TCA  Partnership  Agreement less twice the
amount of all other funds paid or  distributed  to the Company  during such year
pursuant to the Amended and Restated Omnibus Termination Agreement.

To the extent TCA does not have adequate  cash to make the payments  pursuant to
the Amended and Restated Omnibus Termination Agreement, such amount due shall be
deferred  without the accrual of interest until TCA has  sufficient  cash to pay
them.

The Amended and Restated Omnibus Termination Agreement is filed as an exhibit to
the Company's  Quarterly Report on Form 10-Q for the period ended March 31, 2001
(Commission  File No.  333-17795) as accepted by the Commission on May 14, 2001,
and is incorporated herein by reference.

                                       10

<PAGE>


6 - AMENDED AND RESTATED OMNIBUS FINANCING AGREEMENT

Until January 1, 2000 TCA's primary source of revenue was Management Fees. Those
fees were utilized by TCA pursuant to the Amended and Restated Omnibus Financing
Agreement which was terminated effective January 1, 2000.

The Amended and Restated Omnibus  Financing  Agreement is filed as an exhibit to
the Company's  Quarterly  Report on Form 10-Q for the period ended September 30,
1997 (Commission File No. 333-17795),  as accepted by the Commission on November
14, 1997, and is incorporated herein by reference.

E. THE MOHEGAN TRIBAL GAMING AUTHORITY

The Tribe is a federally recognized Indian tribe with an approximately  405-acre
reservation  located in  southeastern  Connecticut.  The Tribe  established  the
Authority  on July 15, 1995 with the  exclusive  power to conduct  and  regulate
gaming activities for the Tribe. Under the Indian Gaming Regulatory Act of 1988,
as amended ("IGRA"), federally recognized Indian tribes are permitted to conduct
full-scale  casino  gaming  operations on  tribal-land,  subject to, among other
things,  the negotiation of a tribal state compact with the affected state.  The
Tribe and the  State of  Connecticut  have  entered  into  such a  compact  (the
"MOHEGAN COMPACT") that has been approved by the U.S. Secretary of the Interior.
The Authority is governed by a management board (the "MANAGEMENT BOARD"),  which
consists of the nine members of the Tribal  Council (the  governing  body of the
Tribe).

Under the terms of the Relinquishment  Agreement, at midnight December 31, 1999,
the Management  Agreement  terminated,  and on January 1, 2000 the Tribe assumed
day-to-day management of the Mohegan Sun.

The Tribe and the Authority have entered into a land lease ("LEASE") pursuant to
which the Tribe is leasing to the Authority the land on which the Mohegan Sun is
located (the  "SITE").  The Site is part of the Tribe's  approximately  405-acre
reservation  which was acquired and is held in trust for the Tribe by the United
States of America with the Tribe  retaining  perpetual  rights to the use of the
Site.

F. THE MOHEGAN SUN

The Authority  owns and operates the Mohegan Sun, an  approximately  3.0 million
square foot  full-service  gaming and  entertainment  complex on a 240-acre site
overlooking  the  Thames  River  on  the  Tribe's  reservation  in  southeastern
Connecticut.  The  Mohegan  Sun is  located  approximately  one  mile  from  the
interchange  of  Interstate  395 and Route 2A in  Uncasville,  Connecticut.  The
Authority  constructed a four-lane  access road and  entrance/exit  ramps off of
Route 2A,  providing  guests direct access to Interstate  395 and Interstate 95,
the main highways  connecting Boston,  Providence and New York City. The Mohegan
Sun opened in October  1996.  The Mohegan  Sun is one of two legally  authorized
gaming  operations in New England  offering both  traditional  slot machines and
table games.

The full-service gaming and entertainment complex includes the following:

CASINO OF THE EARTH. The Casino of the Earth, the original casino at the Mohegan
Sun,  has  approximately   179,500  square  feet  of  gaming  space  and  offers
approximately  3,875 slot  machines and 180 table games  (including,  blackjack,
roulette,  craps and  baccarat).  Food and  beverage  amenities,  include  three
full-service themed fine dining restaurants with a fourth area featuring cuisine
from all three themes,  a 610-seat  buffet,  a ten-station  food court featuring
international  and domestic  cuisine and multiple  service bars, all operated by
the Authority,  for a total of approximately 1,400 restaurant seats ( which will
increase to 1,700  restaurant  seats upon  completion of the new Uncas  American
Indian Grill, a 300-seat full-service  restaurant and bar concept anticipated to
open in July  2005).  An  approximately  10,000  square  foot,  410-seat  lounge
features live entertainment seven days a week. There is an approximately  11,000
square foot  simulcasting  race book facility,  and five retail shops  providing
shopping opportunities ranging from Mohegan Sun logo souvenirs to cigars.

CASINO OF THE SKY. The Casino of the Sky has  approximately  119,000 square feet
of gaming space and offers approximately 2,400 slot machines and 105 table games
(including,   blackjack,  roulette,  craps  and  baccarat).  Food  and  beverage
amenities,  include two full-service restaurants, two quick-service restaurants,
a 24-hour  coffee shop, a 320-seat  buffet,  a six station food court  featuring
international  and domestic  cuisine and five  lounges and bars  operated by the
Authority,  as well as four  full-service  and three  quick-service  restaurants
operated by third-parties,  for a total of approximately 2,600 restaurant seats,
Mohegan After Dark, consisting of a nightclub, a lounge and a pub, which are all
operated by a third party,  the Mohegan Sun Arena with seating for up to 10,000,
a 350-seat  cabaret,  a child care facility and an arcade-style  recreation area
operated by a third party, The Shops at Mohegan Sun containing  approximately 29
different  retail  shops,   six  of  which  are  owned  by  the  Authority,   an
approximately 1,200-room luxury hotel with room service, an approximately 20,000
square foot spa operated by a third party and approximately  100,000 square feet
of convention space.
                                       11


<PAGE>

As of December 31, 2004, Mohegan Sun had parking spaces for approximately 13,000
guests and 3,100 employees. In addition, the Authority operates an approximately
4,000 square foot,  20-pump  gasoline  station and  convenience  center  located
adjacent to the Mohegan Sun.

The Authority formed the Mohegan  Basketball Club,  ("MBC") , for the purpose of
holding a membership in the Women's National Basketball Association ("WNBA") and
owning and operating a  professional  basketball  team in the WNBA.  MBC entered
into  a  membership  agreement  with  the  WNBA  permitting  it to  operate  the
Connecticut  Sun  basketball  team. The team plays its home games in the Mohegan
Sun Arena.

MOHEGAN   VENTURES  -  NW.  In  July  2004,   the   Authority   formed   Mohegan
Ventures-Northwest, LLC, or Mohegan Ventures-NW, one of two members in Salishan-
Mohegan LLC, or Salishan-Mohegan.  Salishan-Mohegan was formed to participate in
the  development  and  management  of a casino to be  located  in Clark  County,
Washington,  or the Cowlitz  Project.  The proposed  casino will be owned by the
Cowlitz  Indian  Tribe.  Both  Mohegan  Ventures-NW  and  Salishan-Mohegan  were
designated as the Authority's unrestricted subsidiaries,  which are not required
to be guarantors of the Authority's debt obligations.

In September  2004,  Salishan-Mohegan  entered into  development  and management
agreements  with the Cowlitz Indian Tribe regarding the Cowlitz  Project.  Under
the  terms  of  the  development  agreement,  Salishan-Mohegan  administers  and
oversees the planning, designing, development,  construction, and furnishing, as
well as provide  assistance  with the financing,  of the Cowlitz Project and the
agreement provides for certain development fees of 3% of total Project Costs, as
defined in the development  agreement.  The management agreement is for a period
of seven years during which  Salishan-Mohegan will manage,  operate and maintain
the planned casino.  The management  agreement  provides for a management fee of
24% of Net Revenues, as defined in the management agreement,  which approximates
income  from  operations  earned from the Cowlitz  Project.  Development  of the
Cowlitz  Project is subject to certain  governmental  and regulatory  approvals,
including,  but not limited to,  negotiating a gaming  compact with the State of
Washington and the United States Department of the Interior  accepting land into
trust on behalf of the Cowlitz Indian Tribe. The management agreement is subject
to approval by the National Indian Gaming Commission.

Menominee  Project.  In October 2004,  the  Authority  entered into a management
agreement with the Menominee Indian Tribe of Wisconsin,  or the Menominee Tribe,
and  the  Menominee  Kenosha  Gaming  Authority.  According  to  the  management
agreement,  the  Authority  was granted the  exclusive  right and  obligation to
manage,  operate  and  maintain a planned  casino and  destination  resort to be
located in Kenosha,  Wisconsin,  or the Menominee Project, for a period of seven
years in consideration of a management fee of 13.4% of Net Revenues,  as defined
in the management  agreement,  which approximates  income from operations earned
from the Menominee Project.  The management  agreement is subject to approval by
the National Indian Gaming Commission.

POCONO DOWNS. On January 25, 2005 the Authority and its wholly owned subsidiary,
Mohegan Commercial  Ventures PA, LLC acquired from subsidiaries of Penn National
Gaming, Inc. the Pocono Downs Racetrack,  a standardbred harness racing facility
located on approximately 400 acres of land in Plains Township,  Pennsylvania, or
Pocono Downs, and five Pennsylvania  off-track  wagering  facilities  located in
Carbondale, East Stroudsburg,  Erie, Hazleton and Lehigh Valley (Allentown). The
$280 million  purchase  price  before  closing  adjustments  and other costs was
funded by the Authority through draws and the Authority's bank credit facility.

The  Authority  has the  right to apply  for a  Pennsylvania  Category  One slot
machine license which, if approved,  would initially permit the installation and
operation of up to 3,000 slot machines at Pocono  Downs.  Upon the issuance of a
slot machine  license,  the Authority  will proceed with its plans to open a new
slot machine  facility which the Authority  anticipates will open in the fall of
2006.  The new facility also is expected to include  restaurants,  lounges and a
small  entertainment  venue. The Authority  anticipates that it will spend up to
$175 million on the construction,  furnishing and equipping of the new facility,
in  addition  to  paying a  one-time  $50  million  fee to the  Commonwealth  of
Pennsylvania upon receipt of a slot machine license.

The information  concerning Kerzner  International,  the Tribe and the Authority
has been derived from publicly filed information.

                                       12


<PAGE>

G. CONTACT INFORMATION; INTERNET ADDRESS

The  principal  executive  offices of the  Company  is  located at 914  Hartford
Turnpike,  Waterford,  Connecticut  06385  and its  telephone  number  is  (860)
442-4559.  The Company's internet address is  http://www.waterfordgroup.net.  In
light of the limited  trading market for the Company's  securities,  the Company
does not  currently  make its periodic and current  reports  available,  free of
charge,  on  its  website.  The  Company's  periodic  and  current  reports  are
available, however, free of charge, on the Commission's website, at www.sec.gov.
The Company  will  provide  electronic  or paper  copies of its filings  free of
charge upon request.

Item 2. PROPERTIES

The Company does not own or lease any real property.

Item 3. LEGAL PROCEEDINGS

On January 6, 1998,  Leisure Resort  Technology,  Inc. and defendants  Waterford
Gaming,  L.L.C.,  Trading Cove  Associates,  LMW  Investments,  Inc., and Slavik
Suites, Inc. settled a prior lawsuit brought by Leisure. In connection with this
settlement, Leisure, TCA, the Company, LMW Investments, Inc., and Slavik Suites,
Inc.  entered  into  a  settlement  and  release  agreement.  Pursuant  to  this
settlement  and release  agreement,  the  Company  bought  Leisure's  beneficial
interest in TCA.

By complaint dated January 7, 2000, as amended February 4, 2000, Leisure filed a
four count complaint naming as defendants Waterford Gaming, L.L.C., Trading Cove
Associates, LMW Investments, Inc., Slavik Suites, Inc., Waterford Group, L.L.C.,
Len Wolman and Mark Wolman (collectively, the "Defendants"). The matter has been
transferred  to the complex  litigation  docket and is pending in State Court in
Waterbury,  Connecticut.  The  complaint  alleged  breach of  fiduciary  duties,
fraudulent non-disclosure, violation of Connecticut Statutes Section 42-110a, et
seq. and unjust  enrichment in connection with the negotiation by certain of the
Defendants of the settlement and release agreement. The complaint also brought a
claim for an accounting.  The complaint  seeks  unspecified  legal and equitable
damages.

On  February  29,  2000,  Defendants  filed a Motion to Strike  and a Motion for
Summary Judgment, each with respect to all claims. The Court granted Defendants'
Motion to Strike in part and denied Defendants' Motion for Summary Judgment,  on
October 13, 2000.  The Court's order  dismissed the claim for an accounting  and
the claim under  Connecticut  Statutes Section  42-110a,  et seq. The Court also
struck the alter ego allegations in the complaint against LMW Investments, Inc.,
Slavik Suites,  Inc., Len Wolman and Mark Wolman.  In a decision dated August 6,
2001,  the Court  dismissed all claims  against LMW  Investments,  Inc.,  Slavik
Suites, Inc., Len Wolman and Mark Wolman.

On November 15, 2000, the Company and its co-defendants  answered the complaint.
In addition,  the Company and Trading Cove Associates asserted counterclaims for
breach of the  settlement  and  release  agreement  and  breach  of the  implied
covenant  of good faith  against  Leisure  and its  president,  Lee Tyrol.  In a
decision dated June 6, 2001, the Court dismissed the  counterclaims  against Lee
Tyrol.  Leisure  moved for summary  judgment  seeking  dismissal  of the counter
claims in full, which motion was denied on April 14, 2003.

Fact   discovery  is  completed.   On  April  15,  2004,  the  Company  and  its
co-defendants filed a motion for summary judgment as to all of Leisure's claims.
The Court heard  argument on this Motion on June 23, 2004. In an August 4, 2004,
Memorandum of Decision, the Court granted summary judgment for the Defendants as
to each of the remaining three counts of the plaintiffs complaint. The plaintiff
has appealed this decision.  Defendants'  counterclaims  are stayed pending this
appeal.

The Company believes that it has meritorious defenses and, if necessary, intends
vigorously  to  contest  the claims in this  action and to assert all  available
defenses.  At the present  time,  the Company is unable to express an opinion on
the likelihood of an unfavorable outcome or to give an estimate of the amount or
range of possible loss to the Company as a result of this  litigation due to the
pendency of the appeal and the disputed  issues of law and/or facts on which the
outcome of this litigation depends.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to the Company's  security  holders for a vote for the
fiscal year ended December 31, 2004.


                                       13


<PAGE>

                                     PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

Not applicable. The Company did not sell any of its equity securities during the
period covered by this report.

Item 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

<S>                  <C>           <C>             <C>            <C>            <C>
                                                  FOR THE YEAR ENDED
                       ------------  -------------   ------------   ------------   ------------
                          2004           2003            2002           2001           2000


Total expenses        $ (16,697,545)$  (24,751,861) $ (13,102,082) $ (13,579,600) $ (13,490,367)

Interest and
  dividend income           117,608        123,634        534,012      1,330,711      1,894,738

Equity in income of
  Trading Cove
  Associates             30,503,631     28,519,860     24,601,380     18,823,461     14,068,067
                       ------------  -------------   ------------   ------------   ------------
Net income            $  13,923,694 $    3,891,633  $  12,033,310  $   6,574,572  $   2,472,438
                       ============  =============   ============   ============   ============


OTHER DATA
 Interest expense     $  13,588,087 $   19,481,783  $  11,080,139  $  11,560,994  $  11,641,049

 Net change in cash
   and cash
   equivalents        $   (320,320) $      233,470  $   1,087,653  $    (453,072) $( 56,313,596)




                                                   YEAR-END STATUS
                       ------------  -------------   ------------   ------------   ------------
                          2004           2003            2002           2001           2000


Total current assets  $  10,750,950 $   11,523,049  $  15,010,697  $  29,769,455  $  46,519,473
 Trading Cove
   Associates-equity
   investment            17,052,615     16,965,487     11,972,338     10,639,562     (7,362,921)
 Beneficial
   Interest-Leisure
   Resort
   Technology, Inc.       3,784,059      4,162,049      4,540,039      4,918,029      5,296,019
 Deferred financing
   costs net of
   accumulated
   amortization           2,903,141      3,568,059      2,643,338      3,010,202      3,377,066
 Fixed assets, net
   of accumulated
   depreciation                 ---            916         11,696         22,476         33,256
                       ------------  -------------   ------------   ------------   ------------
Total assets          $  34,490,765 $   36,219,560  $  34,178,108  $  48,359,724  $  47,862,893
                       ============  =============   ============   ============   ============
 Total current
   liabilities        $   3,728,147 $    4,038,332  $   3,133,192  $   3,400,556  $   3,481,637
 9.50% senior
   notes payable                ---            ---    108,007,000    115,434,000    119,691,000
 8.625% senior
   notes payable        140,761,000    153,088,000            ---            ---            ---

                       ------------  -------------   ------------   ------------   ------------
 Total liabilities    $ 144,489,147 $  157,126,332  $ 111,140,192  $ 118,834,556  $ 123,172,637
                       ------------  -------------  -------------   ------------   ------------
 Member's
   deficiency         $(109,998,382)$ (120,906,772) $ (76,962,084) $ (70,474,832) $ (75,309,744)
                       ============  =============   ============   ============   ============

</TABLE>


                                       14


<PAGE>

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion should be read in conjunction with, and is qualified in
its  entirety  by, the  Company's  financial  statements  and the notes  thereto
included elsewhere herein.

A - DEVELOPMENT AND OPERATIONAL ACTIVITIES

The  Company  was formed  solely for the  purpose  of  holding  its  partnership
interest  in Trading  Cove.  Trading  Cove is the former  manager  and  original
developer  of the Mohegan  Sun.  The  Company's  interest in Trading Cove is its
principal asset and source of income and cash flow.

B - CERTAIN RISK FACTORS

1 - LACK OF OPERATIONS;  DEPENDENCE ON THE MOHEGAN SUN - The Company is entirely
dependent  upon the  performance  of the  Mohegan  Sun to meet its debt  service
obligations.

The Company does not conduct any business  operations  other than in  connection
with its role as a general partner of Trading Cove, activities incidental to the
issuance of the 8.625% Senior Notes and the making of  restricted  and temporary
investments.  The Company is  prohibited by the terms of the 8.625% Senior Notes
Indenture from engaging in any other business activities. The Company intends to
fund its  operating  debt service and capital needs from cash flows from Trading
Cove and from cash flows (dividend and interest) from temporary investments.

Trading  Cove's  only  material   source  of  revenue  and  cash  flows  is  the
Relinquishment  Fees it receives from the  Authority.  There can be no assurance
that the Mohegan  Sun will  continue to  generate  sufficient  revenues  for the
Authority  to be  profitable  or to  service  its  debt  obligations,  or to pay
Relinquishment  Fees. The Company's  ability to meet its  obligations  under the
8.625% Senior Notes is entirely  dependent  upon the  performance of the Mohegan
Sun, which is subject to matters over which Trading Cove and the Company have no
control, including, without limitation,  general economic conditions, effects of
competition,  political,  regulatory  and other  factors,  the actual  number of
gaming customers and the amount wagered.

The  Company  cannot  assure  you that its  future  operating  cash flow will be
sufficient to cover its expenses, including interest on the 8.625% Senior Notes.

2 - LEVERAGE - The Company's and the Authority's substantial  indebtedness could
adversely  affect the  Company's  ability to fulfill its  obligations  under the
8.625% Senior Notes.

As of  December  31,  2004,  the  Company  has  an  aggregate  long-term  senior
indebtedness  of  $140,761,000,  consisting of the 8.625% Senior Notes. On March
15, 2005,  $5,600,000 of principal amount of 8.625% Senior Notes was redeemed at
the redemption  price of 107.610% of the principal  amount being  redeemed.  The
Authority is also highly leveraged. As of December 31, 2004, the Authority had a
total of approximately $1,026 billion of indebtedness outstanding.

The  degree  to  which  the  Authority  is  leveraged  could  have   significant
consequences  for the holders of the 8.625%  Senior  Notes,  including,  without
limitation, the following:

a) making it more  difficult  for the  Authority to pay the fees owed to Trading
Cove under the Relinquishment Agreement; and

b) the Authority's high degree of leverage may make it vulnerable to an economic
downturn,  which may hamper the Mohegan Sun's ability to meet expected operating
results.

3 - SUBORDINATION - Trading Cove's right to receive the relinquishment  payments
from the Authority is junior to certain payments by the Authority to the Mohegan
Tribe and holders of its indebtedness.

The senior and junior relinquishment payments from the Authority to Trading Cove
rank  behind all of the  Authority's  obligations  to pay the  minimum  priority
distributions  to the  Mohegan  Tribe and all of the  Authority's  existing  and
future senior secured indebtedness.

As a result,  upon any  distribution  by the  Authority  to its  creditors  in a
bankruptcy,  liquidation,  reorganization or similar proceeding  relating to the
Authority or its property,  the priority distributions owed to the Mohegan Tribe
and the holders of the Authority's senior secured  indebtedness will be entitled
to be paid in full  and in cash  before  any  senior  or  junior  relinquishment
payments may be made to Trading  Cove.  In addition,  the junior  relinquishment
payments  rank  behind  all  of  the  Authority's  existing  and  future  senior
indebtedness.  As a  result,  in  any  such  proceedings,  the  holders  of  the
Authority's senior  indebtedness will be entitled to be paid in full and in cash
before any junior relinquishment payments may be made to Trading Cove.



                                       15

<PAGE>

In  addition,  all  relinquishment  payments  will be  blocked in the event of a
payment default on senior secured indebtedness of the Authority,  and all junior
relinquishment  payments  will be blocked  in the event of a payment  default on
senior indebtedness of the Authority and, in each case, may be blocked for up to
179 of 360  consecutive  days in the event of certain  non-payment  defaults  on
senior  secured  indebtedness  or  senior  indebtedness  of  the  Authority,  as
applicable.

In the event of a bankruptcy, liquidation,  reorganization or similar proceeding
relating to the Authority,  Trading Cove will receive  distributions (if at all)
on a pari passu basis with all other holders of the Authority's senior unsecured
indebtedness with respect to the senior relinquishment  payments from the assets
remaining  after the Authority has paid all of its senior  secured  indebtedness
and with all other  holders of  subordinated  indebtedness  with  respect to the
junior relinquishment payments from the assets remaining after the Authority has
paid all of its  senior  indebtedness.  However,  the  Relinquishment  Agreement
requires  that amounts  otherwise  payable to Trading  Cove in a  bankruptcy  or
similar  proceeding  of the  Authority  be paid to  holders  of  senior  secured
indebtedness, with respect to the senior and junior relinquishment payments, and
to  holders  of senior  indebtedness,  with  respect  to  junior  relinquishment
payments,  until they are paid in full,  instead of to  Trading  Cove.  For that
reason, Trading Cove may receive less, ratably, than holders of senior unsecured
indebtedness and junior indebtedness of the Authority in any such proceeding. In
any of these cases,  the Authority may not have  sufficient  funds to pay all of
its creditors and Trading Cove may receive  less,  ratably,  than the holders of
the Authority's senior indebtedness.

For the year ending September 30, 2004, the annual minimum priority distribution
to the Mohegan Tribe was $15.4 million.  The minimum  priority  distribution  is
adjusted  annually to reflect the  cumulative  increase  in the  consumer  price
index.  The  Authority  will  be  permitted  to  borrow  substantial  additional
indebtedness, including senior secured indebtedness, in the future.

4 - RISKS  ASSOCIATED  WITH  TRADING  COVE  AND  THE  TRADING  COVE  PARTNERSHIP
AGREEMENT  - The Company  would not be a creditor of Trading  Cove and it has no
rights to the assets of the  Authority in the event of a  bankruptcy  or similar
proceeding  against either  Trading Cove or the Authority.  The Company does not
have the power under the TCA Partnership Agreement to cause Trading Cove to make
any distributions to the Company.

If Trading Cove becomes the debtor in a bankruptcy  or similar  proceeding,  the
Company would have the status of an equity holder, not a creditor, and would not
be entitled to receive any  distributions  until all of Trading Cove's creditors
were paid in full.

If the  Authority  became the  debtor in a  bankruptcy  or  similar  proceeding,
Trading Cove's rights and recovery would depend on numerous  factors,  including
the type and outcome of the proceeding.  If the Authority ceased  operations and
liquidated,  under Chapter 7 of the Bankruptcy Code or otherwise, Trading Cove's
claim would likely be limited to the amount of unpaid  Relinquishment Fees as of
the time of liquidation.  If the Authority  reorganized  under Chapter 11 of the
Bankruptcy  Code,  Trading  Cove's claim would likely be based on an estimate of
the Mohegan Sun's future revenues for the term of the Relinquishment  Agreement.
In any event,  any  recovery by Trading  Cove on its claims for senior or junior
relinquishment  fees  would  be  subject  to the  prior  payment  in full of all
indebtedness senior thereto.

As a  result,  the  Company  cannot  give any  assurance  that,  in the event of
bankruptcy or financial  difficulty of either Trading Cove or the Authority,  it
would ultimately  recover  sufficient (or any) funds to pay amounts  outstanding
under the 8.625% Senior Notes.

The 8.625%  Senior  Notes are not  collateralized  by a pledge of the  Company's
partnership  interest  in  Trading  Cove.  Accordingly,   in  the  event  of  an
acceleration  under the 8.625%  Senior Notes  Indenture,  the trustee  under the
8.625% Senior Notes  Indenture  will not be able to foreclose upon the equity in
Trading Cove.

The TCA Partnership Agreement requires consent by both partners in order to take
any action.  Accordingly,  neither the Company nor Kerzner  Investments  has the
authority  to  cause  Trading  Cove  to  make  any  distributions,  and  Kerzner
Investments has the ability to block any action taken by Trading Cove.  Although
the TCA Partnership  Agreement  requires  Trading Cove to make  distributions of
excess cash, the distributions are reduced by certain  undefined,  discretionary
amounts,  including  foreseeable  needs of cash,  obligations  to third parties,
adequate  working  capital and reserves and the amount needed by the partnership
to conduct  its  business  and carry out its  purposes.  A dispute  between  the
partners as to the appropriate  amount of such reductions  could result in no or
limited  distributions  by Trading  Cove,  which  could have a material  adverse
effect on the Company's ability to make required payments of interest, principal
and premium on the 8.625% Senior Notes.

Under the TCA  Partnership  Agreement  and certain  other  existing  agreements,
Trading  Cove  must  pay  expenses  and  make  certain   payments  and  priority
distributions  prior to making  distributions  to the  Company.  Such  expenses,
payments and priority distributions include,

(1) operating  expenses and to the extent operating  expenses are less than $2.0
million annually,  payment of the difference to each of Kerzner  Investments and
the principals of the Company;


                                       16
<PAGE>

(2) the development fee to be paid to Kerzner Investments, Construction, and The
Slavik Company and related development  expenses equal to 3 percent of the total
cost of the Project Sunburst expansion,  excluding  capitalized  interest,  less
Trading Cove's actual costs relating to the Project Sunburst  expansion (Trading
Cove's  accrued  liability  to Kerzner  Investments  with respect to such fee at
December 31, 2004 was approximately $414,000), and

(3) a $5.0 million  annual  payment to Kerzner  Investments,  payable  quarterly
until December 31, 2006.

All of these amounts reduce the amounts  distributable to the Company.  Finally,
the Company and Trading Cove are party to  litigation  with a former  partner of
Trading Cove,  which, if adversely  determined,  could  materially and adversely
affect its future distributions from Trading Cove.

5 - RISKS  ASSOCIATED  WITH THE BUY/SELL  OPTION UNDER TRADING COVE  PARTNERSHIP
AGREEMENT - If a dispute occurs between the Company and Kerzner Investments, the
buy/sell  provision of the TCA Partnership  Agreement  could be invoked.  If the
buy/sell provision is invoked,  the Company cannot assure you that it would have
sufficient  funds to buy out Kerzner  Investments  or, if the Company  agreed to
sell to Kerzner  Investments,  that the selling price would be sufficient to pay
all amounts due on the 8.625% Senior Notes.

In the event of any dispute between the partners in Trading Cove, either partner
could invoke the buy/sell provision contained in the TCA Partnership  Agreement.
Pursuant to the buy/sell  provision,  the party invoking the buy/sell  provision
would  deliver a notice to the other party  requiring it to sell its interest or
buy the invoking party's  interest,  in each case at the price set forth in such
notice.  The party receiving the notice must make the election within 45 days of
receipt of the notice or be deemed to have  accepted  the offer to sell.  If the
offer to buy is elected, the party must close the purchase within 75 days of the
end of the 45-day  period.  Any party may terminate the option at any time prior
to closing by accepting  the position of the other party.  In the event  Kerzner
Investments were to invoke the buy/sell provision, the Company could:

a) buy Kerzner Investments' interest;

b) sell its interest; or

c) agree with Kerzner Investments on the point of dispute.

The Company may transfer  its right to buy under the  buy/sell  provision of the
TCA Partnership Agreement to the Waterford Group or the Waterford Group may fund
the purchase of Kerzner Investments partnership interest. If the Company were to
elect to buy  Kerzner  Investments  partnership  interest  other than with funds
provided by the Waterford Group, the 8.625% Senior Notes Indenture  requires the
Company to redeem the 8.625% Senior Notes; however the Company cannot assure you
that it would be able to raise  funds  sufficient  for the Company to redeem the
8.625% Senior Notes on satisfactory terms, or at all.

If the Company  were to sell its  partnership  interest in Trading  Cove,  it is
possible that the amount the Company  receives would be  insufficient to pay all
amounts  due on the 8.625%  Senior  Notes.  If the  Company  were to concur with
Kerzner  Investments with respect to the point of dispute,  it cannot assure you
that Kerzner  Investments'  position would not have a material adverse effect on
the  Company's  ability to pay  principal,  interest  and  premium on the 8.625%
Senior Notes.

6 - DIFFICULTIES IN ENFORCING OBLIGATIONS AGAINST THE AUTHORITY - The ability to
enforce  obligations  against the  Authority and the Mohegan Tribe is limited by
the Mohegan Tribe's sovereign immunity.

Although the Mohegan Tribe and the Authority have sovereign immunity and may not
be sued without their  consent,  both the Mohegan  Tribe and the Authority  have
granted a limited waiver of sovereign immunity and consent to suit in connection
with the  Relinquishment  Agreement,  including  suits  against the Authority to
enforce the obligation to pay fees due under the  Relinquishment  Agreement.  In
the event that such  waiver of  sovereign  immunity  is held to be  ineffective,
Trading  Cove  could be  precluded  from  judicially  enforcing  its  rights and
remedies.  Generally,  waivers  of  sovereign  immunity  have  been  held  to be
enforceable  against Indian tribes such as the Mohegan Tribe.  In addition,  the
Company has no standing to enforce the  Relinquishment  Agreement  and therefore
would have to rely on Trading Cove to enforce such agreement.


                                       17
<PAGE>

The  Relinquishment  Agreement  provides that disputes  shall be resolved in any
court of  competent  jurisdiction  including  the Gaming  Disputes  Court of the
Mohegan Tribe,  which was established under the Mohegan Tribe's  constitution to
rule on disputes  with respect to the Mohegan Sun.  Appeals of the  decisions of
the Trial  Division  are heard by the  Appellate  Branch of the Gaming  Disputes
Court.  Matters as to which applicable federal or state courts have jurisdiction
may be  brought  in such  courts.  However,  the  federal  courts  may not  have
jurisdiction  over  disputes not arising under federal law, and the state courts
may not have jurisdiction over any disputes arising on the Mohegan  reservation.
Moreover,  the  federal  and state  courts,  under the  doctrines  of comity and
exhaustion of tribal remedies,  may be required to (1) defer to the jurisdiction
of the Gaming  Disputes  Court or (2)  require  that any  plaintiff  exhaust its
remedies in the Gaming  Disputes Court before bringing any action in the federal
or state court.  Thus, there may be no federal or state court forum with respect
to  a  dispute  with  the  Authority  or  the  Mohegan  Tribe  relating  to  the
Relinquishment  Agreement.  In addition, the Authority may not be subject to the
federal  bankruptcy  laws.  Thus, no assurance can be given that, if an event of
default occurs,  any forum will be available other than an arbitration  panel of
the Gaming Disputes  Court. In the Gaming Disputes Court,  there are few guiding
precedents  for the  interpretation  of Mohegan  Tribal law. Any  execution of a
judgment  of the Gaming  Disputes  Court will  require  the  cooperation  of the
Mohegan Tribe's  officials in the exercise of their police powers.  Thus, to the
extent that a judgment of the Gaming  Disputes Court must be executed on Mohegan
Tribal lands,  the practical  realization of any benefit of such a judgment will
be dependent upon the willingness and ability of the Mohegan Tribal officials to
carry out such judgment. In addition, the land under the Mohegan Sun is owned by
the United States in trust for the Mohegan Tribe, and creditors of the Authority
or the Mohegan Tribe may not force or obtain title to the land.

The Mohegan Tribe is permitted to amend the provisions of its constitution  that
establish  the  Authority  and the Gaming  Disputes  Court with the  approval of
two-thirds  of the  members  of the Tribal  Council  and a  ratifying  vote of a
two-thirds majority of all of the members of the Mohegan Tribe, with at least 40
percent of the registered voters of the Mohegan Tribe voting.  However, prior to
the enactment of any such amendment by the Tribal Council,  any non-tribal party
will have the  opportunity  to seek a ruling  from the  Appellate  Branch of the
Gaming  Disputes  Court  that  the  proposed   amendment  would   constitute  an
impermissible impairment of contract.  Further, the Mohegan Tribe's constitution
prohibits  the  Mohegan  Tribe  from  enacting  any law that  would  impair  the
obligations  of  contracts  entered  into  in  furtherance  of the  development,
construction,  operation  and  promotion  of gaming  on  Mohegan  Tribal  lands.
Amendments to this  provision of the Mohegan  Tribe's  constitution  require the
affirmative  vote of 75 percent of all  registered  voters of the Mohegan Tribe.
Amendment to any of such  provisions of the Mohegan Tribe's  constitution  could
adversely  affect the ability of Trading Cove to enforce the  obligations of the
Authority,  which, in turn would adversely  affect the Company's  ability to pay
principal, interest and premium on the 8.625% Senior Notes.

7 - FUTURE  EXPANSION  OF THE MOHEGAN SUN - In the event that the Mohegan  Tribe
decides to expand the Mohegan Sun,  Trading Cove has no rights  associated  with
such expansion.

The Mohegan Tribe may in the future decide to expand the Mohegan Sun.  Under the
terms of the Relinquishment Agreement,  Trading Cove is entitled to 5 percent of
all revenues derived directly or indirectly from the Mohegan Sun,  including the
Project  Sunburst  expansion  but  excluding  revenues  derived  from any future
expansions  and from Class II gaming  activities.  If the Mohegan Sun is further
expanded, Trading Cove, under the terms of the Relinquishment Agreement will not
be entitled to any of the revenues generated by the incremental  expansion.  The
Relinquishment  Agreement  does not describe how the  Authority  would  allocate
which revenues were covered by the  Relinquishment  Agreement and which revenues
were not. In  addition,  Trading  Cove has no rights to act as  developer of any
such expansion.  The Company cannot assure you that any future  expansion of the
Mohegan Sun will not have a material adverse affect on the Authority,  including
by  disrupting  the current  operations  of the  Mohegan  Sun thereby  affecting
revenues and the Authority's ability to pay Relinquishment Fees to Trading Cove.
In addition,  the Company  cannot assure you that any future  expansion will not
draw guests to those  portions of the Mohegan Sun from which Trading Cove is not
entitled to a percentage of revenues, thereby impacting the Relinquishment Fees.
If the  Mohegan  Tribe were to take any action  that would  prejudice  or have a
material  adverse effect on the rights of Trading Cove under the  Relinquishment
Agreement,  Trading Cove could sue the Mohegan Tribe for breach of contract. The
Company  cannot  assure  you that  any such  lawsuit  would be  successful.  See
"Difficulties in Enforcing Obligations Against the Authority."

8 -  COMPETITION  FROM  OTHER  GAMING  OPERATIONS  -The  Mohegan  Sun  may  face
significant competition from other persons who may receive approval to engage in
gaming in the region.

                                       18
<PAGE>

The gaming industry is highly  competitive.  The Mohegan Sun currently  competes
primarily with Foxwoods Resort Casino ("Foxwoods") and, to a lesser extent, with
casinos in Atlantic City,  New Jersey and upstate New York.  Foxwoods is located
approximately 10 miles from the Mohegan Sun.  Foxwood's recently completed a $99
million casino expansion.

Currently,   other  than  Atlantic  City,  New  Jersey,  casino  gaming  in  the
Northeastern  United  States is conducted  only by federally  recognized  Indian
tribes operating under federal Indian gaming law. The New York State legislature
authorized  certain  limited  machine gaming at several race tracks in the state
but not full-scale  casino gaming.  To date,  three separate race tracks operate
approximately  3,000  machines.  The legislature  also  authorized  three Indian
casinos in the Catskills  region of New York (Sullivan and Ulster  counties) and
three   casinos  to  be  operated  by  the  Seneca  Nation  of  Indians  in  the
Niagara/Buffalo  area.  The Seneca  Nation opened a facility in Niagara Falls in
late December 2002 and opened another facility in Salamanca,  New York, in early
May  2004.  The  validity  of the New York  State  statute  is  currently  being
litigated in the state's highest court of appeals.

The  Governor  of New York  recently  entered  into five land  claim  settlement
agreements  with  Indian  tribes  that will  require  the State  legislature  to
increase the number of authorized  tribal  casinos in the Catskills  region from
three (3) to five (5). In the event this is approved and federal  legislation is
also enacted, then there is the likelihood that significant  competition for New
York patrons will ensue.  The  Catskills  region is about 185 miles from Mohegan
Sun.

The Oneida Indian  Nation  operates  Turning Stone Casino Resort in Verona,  New
York,  approximately  270 miles from the Mohegan Sun. The St. Regis Mohawk Tribe
in Hogansburg,  New York has entered into a gaming compact with the State of New
York to conduct gaming on its reservation near the Canadian border.

In  addition,  several  other  federally  recognized  tribes in New  England are
seeking to establish  gaming  operations.  These  include the  Historic  Eastern
Pequot Tribe of Connecticut and the  Schaghticoke  Tribal Nation of Connecticut.
The status of both  tribes is being  challenged.  In addition  the  Narragansett
Tribe of Rhode Island,  the Aquinnah  Wampanoag Tribe of  Massachusetts  and all
four of the tribes in the State of Maine: the Penobscot, Passamaquoddy,  Houlton
Band and Micmac Tribes continue to explore gaming opportunities.  A recent state
wide referendum in Maine rejected any off-reservation Indian casino gaming.

The  Narragansett  Tribe of Rhode Island has  partnered  with Harrah's to open a
facility in West  Warwick.  The proposed  casino  would be operated  under Rhode
Island law and not under the Indian Gaming  Regulatory Act. This arrangement was
contained  in a  statewide  ballot  measure  that  was  scheduled  for a vote in
November  2004.  However,  the  State  Supreme  Court in August  2004  issued an
advisory opinion that the referendum would violate the State's constitution.  At
this writing, the status of the  Narragansett/Harrah's  effort remains uncertain
but there have been reports that another ballot measure will be offered.

There are several other groups in New England  seeking  federal  recognition  as
tribes.  If successful,  these groups will most likely seek to establish  casino
operations.  In Massachusetts,  one such group is the Mashpee Wampanoag which is
awaiting a proposed finding.

A number  of states in the  region  are  projecting  budget  shortfalls  and are
considering  permitting forms of gaming to provide state revenues.  In an effort
to address its state budget shortfalls,  the Governor of Massachusetts and other
leaders  in that  state  have  indicated  interest  in both  Indian  gaming  and
non-Indian commercial gaming.


                                       19

<PAGE>

The Mohegan Sun also competes with other forms of gaming, including on-track and
off-track  wagering,  state  lotteries  and  Internet  gaming,  as  well as with
non-gaming leisure activities.

9 - Effect of General  Economic  Conditions - The U.S. economy is experiencing a
downturn, which could have an adverse impact on the financial performance of the
Mohegan Sun.

The  Mohegan  Sun is  affected  by general  economic  conditions.  The events of
September 11th and the war in Iraq further exacerbated  difficult  conditions in
the U.S. economy and the gaming industry generally.  The effects of these events
have  included a decline in  vacation  travel and  tourism  due to,  among other
factors,  fears  regarding  additional  acts of  terrorism.  The  magnitude  and
duration of these  effects or any future acts of terrorism is unknown and cannot
be  predicted.  Worsening  economic  conditions or a prolonged  recession  could
hamper the Mohegan Sun's ability to meet expected operating results.

10 - Dependence on Key Personnel;  significant change in Tribal Management - The
loss of any key management member or any significant change in the makeup of the
Tribal Council could have a material adverse effect on the Mohegan Sun.

The Mohegan  Sun's  success  depends in large part on the  continued  service of
certain key management personnel,  particularly William Velardo, the Authority's
President  and Chief  Executive  Officer,  Mitchell  Etess,  the  Mohegan  Sun's
President  and Chief  Executive  Officer,  Jeffrey  Hartmann,  the Mohegan Sun's
Executive  Vice President and Chief  Operating  Officer,  and Leo Chupaska,  the
Authority's Chief Financial Officer.  The loss of the services of one or more of
these individuals or other key personnel could have a material adverse effect on
the Authority's  business,  operating results and financial  condition which, in
turn, would have a material adverse effect on the Company's  ability to meet its
obligations under the 8.625% Senior Notes.

Additionally,  Mark F. Brown  serves as  Chairman  of the Tribal  Council of the
Mohegan Tribe and Chairman of the Management Board of the Authority. The Members
of the Tribal Council,  including the Chairman, are elected by the Mohegan Tribe
every five years.  The next election is in October 2005. The loss of Mr. Brown's
services,  as well as a  significant  change in the  composition  of the  Tribal
Council,  could have a material  adverse effect on the Authority which, in turn,
would  have a  material  adverse  effect on the  Company's  ability  to meet its
obligations under the 8.625% Senior Notes.

11 - Highly  Regulated  Industry  -  Changes  in the law could  have a  material
adverse effect on the Authority's ability to conduct gaming.

Gaming on the Mohegan Tribe's  reservation is extensively  regulated by federal,
state and  tribal  regulatory  bodies,  including  the  National  Indian  Gaming
Commission and agencies of the State of Connecticut  (for example,  the Division
of Special Revenue,  the State Police and the Department of Liquor Control).  As
is the case with any casino,  changes in applicable laws and  regulations  could
limit or  materially  affect the types of gaming that the  Authority can conduct
and the revenues they realize.  Congress has  regulatory  authority  over Indian
affairs  and can  establish  and change the terms upon which  Indian  tribes may
conduct  gaming.  Currently,  the  operation  of all  gaming on Indian  lands is
subject to the Indian Gaming Regulatory Act of 1988. For the past several years,
legislation  has been  introduced  in  Congress  with the intent of  modifying a
variety of perceived  problems with the Indian Gaming  Regulatory  Act.  Certain
bills have also been proposed  which would have the effect of repealing  many of
the key  provisions  of the Indian Gaming  Regulatory  Act and  prohibiting  the
continued  operation of certain classes of gaming on certain Indian reservations
in states  where such gaming is not  otherwise  allowed on a  commercial  basis.
However,  none of the  substantive  proposed  adverse  amendments  to the Indian
Gaming  Regulatory  Act have  proceeded  out of committee  hearings to a vote by
either the House or the Senate.


                                       20

<PAGE>
In the event that Congress passes prohibitory  legislation that does not include
any grandfathering exemption for existing tribal gaming operations,  and if such
legislation is sustained in the courts against tribal challenge, the Authority's
ability to meet its  obligations  to  creditors,  such as Trading Cove under the
Relinquishment  Agreement,  would be doubtful.  If the Authority  were unable to
meet its  obligations,  it would have a material adverse effect on the Company's
ability to make  payments  of  principal,  interest  and  premiums on the 8.625%
Senior Notes.

Under  federal law,  gaming on Indian land is  dependent  on the  permissibility
under state law of certain forms of gaming or similar  activities.  If the State
of  Connecticut  were to make various forms of gaming  illegal or against public
policy,  such action may have an adverse  effect on the ability of the Authority
to conduct  gaming.  In fact,  the State of  Connecticut  repealed the Las Vegas
Casino Nights statute in 2003,  but the state  attorney  general has opined that
this will not affect the two existing Indian gaming compacts.

12 -  Possible  Environmental  Liabilities  - Risks  of  material  environmental
liability  may exist as a result of  possibly  incomplete  remediation  of known
environmental hazards and the existence of unknown environmental hazards.

The site on which the  Mohegan Sun is located  was  formerly  occupied by United
Nuclear  Corporation,  a naval  products  manufacturer  of, among other  things,
nuclear reactor fuel components.  Prior to the decommissioning of United Nuclear
Corporation  facilities on the site, extensive remediation of contaminated soils
and additional  investigations were completed.  The site currently meets federal
and state remediation  requirements.  Notwithstanding the foregoing, the Company
cannot assure you that:

a) the various environmental reports or any other existing environmental studies
revealed all environmental liabilities;

b) any  prior  owners or  tenants  did not  create  any  material  environmental
condition not known to the Company;

c)  future  laws,  ordinances  or  regulations  will  not  impose  any  material
environmental liability; or

d) a material environmental condition does not otherwise exist on the site.

13 - Taxation of Indian Gaming - A change in the Authority's  current tax-exempt
status could have a material  adverse effect on the Authority's  ability to make
capital improvements and repay its indebtedness.

Based on  current  interpretations  of the  Internal  Revenue  Code of 1986,  as
amended (the  "Code"),  neither the Mohegan Tribe nor the Authority is a taxable
entity for purposes of federal income  taxation.  There can be no assurance that
Congress will not reverse or modify the exemption for Indian tribes from federal
income taxation.

Efforts were made in Congress in the  mid-1990s to amend the Code to provide for
taxation of the net income of tribal  business  entities.  These have included a
House bill  which  would have taxed  gaming  income  earned by Indian  tribes as
unrelated  business income subject to corporate tax rates.  This legislation was
not enacted.  However,  tax reform is being considered in the 109th Congress and
some  leading  proposals  include  taxation  of  gaming  proceeds.  If  enacted,
legislation in this area could  materially and adversely  affect the Authority's
ability to make capital  improvements and repay its indebtedness which, in turn,
would  have a  material  adverse  effect on the  Company's  ability  to meet its
obligations under the 8.625% Senior Notes.


                                       21

<PAGE>
C - SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates and  assumptions  that affect the amounts of assets and liabilities at
the  date  of the  financial  statements,  as well as the  reported  amounts  of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

In the  opinion  of  management,  the  Company  does  not  have  any  individual
accounting  policy  that  is  critical  in  the  preparation  of  its  financial
statements.  This is due to the  definitive  nature of the business in which the
Company is engaged.  Also,  in many cases,  the Company  must use an  accounting
policy or  method  because  it is the only  policy  or  method  permitted  under
accounting principles generally accepted in the United States of America.

The  following  is a review  of the more  significant  accounting  policies  and
methods used by the Company:

1 -  CONCENTRATION  OF  CREDIT  RISK  - The  Company's  interest  in  TCA is its
principal  asset and  source of income and cash flow.  The  Company  anticipates
regular distributions from TCA based upon the operating results of the Authority
and the related Relinquishment Fees paid and to be paid by the Authority.

2 - EQUITY INVESTMENTS - The Company's equity investment in TCA is accounted for
utilizing the equity  method.  Included in the  investment is the purchase price
paid to a  corporation  for its 12.5  percent  interest  in TCA.  This amount is
amortized  over  the  term  of  the  related  agreement.  The  Company  receives
distributions  from TCA in  accordance  with an  Amended  and  Restated  Omnibus
Termination  Agreement.  The amount of distributions relies upon the fees earned
and cash  received by TCA  pursuant  to the  Relinquishment  Agreement  with the
Authority. Distributions are recorded when received.

D - TABLE OF CONTRACTUAL OBLIGATIONS

The following table provides an overview of the Company's aggregate  contractual
obligations as of the latest fiscal year end balance sheet date.

<TABLE>
<CAPTION>

<S>                                         <C>          <C>              <C>             <C>           <C>
CONTRACTUAL OBLIGATIONS                                              PAYMENTS DUE BY PERIOD
-----------------------                                              ----------------------
                                                          LESS THAN 1                                     MORE THAN
                                             TOTAL           YEAR          1-3 YEARS       3-5 YEARS       5 YEARS
                                            -------      -------------    -----------     -----------   -------------
Long-Term Debt
    Obligations(1).................          (1)              (1)             (1)             (1)             (1)
Capital Lease
    Obligations....................           0                0               0               0               0
Operating Lease
     Obligations ..................           0                0               0               0               0
Purchase Obligations ..............           0                0               0               0               0
Other Long-Term
    Liabilities on the
      Registrant's Balance
        Sheet under GAAP ..........           0                0               0               0               0
Total..............................          (1)              (1)             (1)             (1)             (1)

</TABLE>

(1)  As  of  December  31,  2004,  the  Company's  long-term  debt  consists  of
obligations under its 8.625% Senior Notes.  $135,161,000 in aggregate  principal
amount of 8.625%  Senior Notes is currently  outstanding.  At December 31, 2004,
the Company had an aggregate long-term senior  indebtedness of $140,761,000.  On
March 15,  2005,  $5,600,000  of  principal  amount of 8.625%  Senior  Notes was
redeemed  at the  redemption  price of 107.610% of the  principal  amount  being
redeemed. Interest on the outstanding principal amount of 8.625% Senior Notes is
payable by the Company semi-annually in arrears on March 15th and September 15th
at a rate of 8.625% per annum. The outstanding principal amount of 8.625% Senior
Notes is due and payable in full on September  15,  2012.  In addition to making
payments of principal and interest as described in the preceding  sentences,  on
March 15th and September  15th of each year, the Company and Finance must redeem
their  8.625%  Senior  Notes with any  "Company  Excess Cash" (as defined in the
8.625% Senior Notes  Indenture) at a redemption  price expressed as a percentage
of the principal amount of notes being redeemed.  Such redemption price declines
annually  from  108.625% for  redemptions  made between  September  15, 2003 and
September 14, 2004, to 100% for  redemptions  made after September 14, 2012. Any
reduction in  principal  amount of the 8.625%  Senior Notes with Company  Excess
Cash will  lower the  interest  payments  payable by the  Company in  subsequent
periods.

OFF-BALANCE SHEET ARRANGEMENTS
------------------------------

The Company does not have any material  off-balance sheet arrangements that have
or are  reasonably  likely to have a current or future  effect on the  Company's
financial  condition,  changes in  financial  condition,  revenues or  expenses,
results of operations, liquidity, capital expenditures or capital resources.

                                       22

<PAGE>

E - OVERVIEW OF CURRENT AND FUTURE CASH FLOWS

The Company  expects to fund its operating,  debt service and capital needs from
cash flows from the  Company's  distributions  from TCA, and from the  Company's
available  cash.  Based  upon  the  Company's   anticipated  future  operations,
management  believes  that  available  cash flow will be  sufficient to meet the
Company's  anticipated  requirements  for  future  operating  expenses,   future
scheduled  payments of  principal  and  interest on the 8.625%  Senior Notes and
additional  investments  in TCA  that may be  required  in  connection  with the
Project  Sunburst  expansion.  No  assurance,  however,  can be  given  that the
operating cash flow will be sufficient for that purpose.

1 - SOURCES OF INCOME AND CASH FLOWS

The Company has one primary  source of income and cash flow:  equity  income and
distributions from TCA. The Company  anticipates regular payments from TCA based
on the  results of the  Mohegan  Sun and  Relinquishment  Fees  payments  by the
Authority to TCA.

2 - PAYMENTS OF DISTRIBUTIONS ON THE COMPANY'S PARTNERSHIP INTEREST IN TCA

On April 27,  2004,  July 27, 2004,  October 26, 2004 and January 26, 2005,  the
Company   received   $2,620,000,   $11,925,000,   $4,073,386  and   $12,447,404,
respectively,  from TCA as  distributions,  which represents the Company's share
under the Amended and Restated  Omnibus  Termination  Agreement of approximately
$69,001,000 in Relinquishment  Fees earned by TCA pursuant to the Relinquishment
Agreement for the year January 1 through December 31, 2004.

On April 28,  2003,  July 28, 2003,  October 28, 2003 and January 27, 2004,  the
Company   received   $2,876,707,   $6,365,797,   $3,512,706   and   $11,798,117,
respectively,  from TCA as  distributions,  which represents the Company's share
under the Amended and Restated  Omnibus  Termination  Agreement of approximately
(a)  $65,100,000  in   Relinquishment   Fees  earned  by  TCA  pursuant  to  the
Relinquishment  Agreement for the year January 1 through  December 31, 2003, and
(b)  $168,000  in  Development  Fee earned by TCA  pursuant  to the  Development
Agreement for the same period.

F - RESULTS OF OPERATIONS

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED
DECEMBER 31, 2004 AND 2003

Total  expenses for the twelve months ended  December 31, 2004 were  $16,697,545
compared with  $24,751,861  for the twelve months ended  December 31, 2003.  (a)
Interest expense decreased by $5,893,696 and amortization on deferred  financing
costs  decreased by  $2,253,392  due  primarily to the  redemption  of the 9.50%
Senior Notes in the  principal  amount of  $102,349,000  and the issuance of the
8.625%  Senior Notes in the principal  amount of $155 million in June 2003,  (b)
salaries-related  parties  increased  by  $316,422  due to (i) the  increase  in
Revenues  of the Mohegan Sun and (ii)  effective  January 1, 2004 the  incentive
compensation in terms of Mr. Len Wolman's  employment  agreement  changed from a
fixed  0.05% of the  revenues  of the  Mohegan Sun to an amount that ranges from
0.00% to 0.10% of the  revenues of the Mohegan Sun (for the year ended  December
31, 2004, incentive  compensation was calculated at 0.07% of the revenues of the
Mohegan  Sun) and (c) general and  administrative  costs  increased  by $295,628
(primarily  attributable to (i) an increase in legal and other expenses  related
to the defense of the Leisure  litigation  as  described in PART I: Item 3 LEGAL
PROCEEDINGS, of approximately $303,300, (ii) by an increase in insurance expense
of  approximately  $5,900,  (iii) by an  increase  in other  legal  expenses  of
approximately  $7,300,  (iv) by an  increase in payroll  taxes of  approximately
$4,300  and  offset  by  (v)  a  decrease  in  Commission   filing  expenses  of
approximately  $8,700 and (vi) by a decrease in accounting fees of approximately
$14,500), (d) 9.50% senior notes tender expense decreased by $509,414 due to the
redemption of the 9.50% Senior Notes in June 2003 and (e) depreciation decreased
by $9,864.

Equity in income of Trading Cove Associates for the year ended December 31, 2004
was $30,503,631  compared with $28,519,860 for the year ended December 31, 2003.
The Company has included amortization of purchased interests of $440,028 in each
year's equity income. The Company's share of TCA's results fluctuates based upon
revenues earned by TCA under the Relinquishment Agreement. In addition, interest
and dividend income decreased by $6,026.

As a result of the  foregoing  factors,  the Company  experiences  net income of
$13,923,694  for the year ended  December 31, 2004,  compared with net income of
$3,891,633 for the year ended December 31, 2003.

                                       23


<PAGE>

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED
DECEMBER 31, 2003 AND 2002

Total  expenses for the twelve months ended  December 31, 2003 were  $24,751,861
compared with  $13,102,082  for the twelve months ended  December 31, 2002.  (a)
Interest expense  increased by $8,401,644 due primarily to the redemption of the
9.50% Senior Notes in the principal amount of $102,349,000 at the tender premium
of  approximately  $7,164,000 and the issuance of the 8.625% Senior Notes in the
principal  amount of $155 million,  (b)  salaries-related  parties  increased by
$65,912 due to the  increase in  Revenues  of the Mohegan  Sun,  (c) general and
administrative  costs  increased by $121,363  (primarily  attributable to (i) an
increase  in legal and other  expenses  related to the  defense  of the  Leisure
litigation,  as described in PART I: Item 3 LEGAL PROCEEDINGS,  of approximately
$106,900,  (ii) an increase in insurance expense of approximately  $8,800, (iii)
an  increase in  Commission  filing  expense of  approximately  $8,900,  (iv) an
increase in accounting fees of  approximately  $15,400 and (v) by an increase in
rating agency fees of approximately $9,600 and offset by (vi) a decrease in bank
sweep  fees of  approximately  $15,900  and (vii) by a decrease  in other  legal
expenses of  approximately  $11,400),  (d) 9.50%  senior  notes  tender  expense
increased  by $509,414 due to the  redemption  of the 9.50% senior notes and (e)
amortization  on deferred  financing costs increased by $2,551,446 due primarily
to the  redemption of the 9.50% Senior Notes,  the issuance of the 8.625% Senior
Notes and the  additional  amortization  due to the mandatory  redemption of the
8.625% Senior Notes on September 15, 2003.

Equity in income of Trading Cove Associates for the year ended December 31, 2003
was $28,519,860, compared with $24,601,380 for the year ended December 31, 2002.
The Company has included amortization of purchased interests of $440,028 in each
year's equity income. The Company's share of TCA's results fluctuates based upon
revenues  earned by TCA under the  Relinquishment  Agreement and the Development
Agreement. In addition, interest and dividend income decreased by $410,378.

As a result of the  foregoing  factors  the  Company  experienced  net income of
$3,891,633  for the year ended  December 31, 2003,  compared  with net income of
$12,033,310 for the year ended December 31, 2002.


LIQUIDITY AND CAPITAL RESOURCES

The initial capital of the Company consists of the partnership  interests in TCA
contributed  by Slavik and LMW  Investments,  Inc.  in forming the  Company.  In
connection  with the  offering of the 12.75%  Senior  Notes,  the  Company  used
approximately $25.1 million to purchase from Kerzner International $19.2 million
in  principal  amount of  Authority  subordinated  notes plus accrued and unpaid
interest and  subordinated  notes fee  amounts.  In  addition,  TCA  distributed
approximately  $850,000 in principal amount of Authority  subordinated  notes to
the Company.  In addition,  the Company used approximately  $10.6 million of the
proceeds  from the 12.75%  Senior  Notes to  purchase  RJH  Development  Corp.'s
interests in TCA.


During  September 1997 and on October 12, 1998 and 1999,  the Company  purchased
from  Kerzner  International  $2.5  million  Authority  subordinated  notes plus
accrued and unpaid  interest and  completion  guarantee fee amounts  (total cost
approximately $2.8 million for each transaction).

On January 6, 1998 the Company paid $5 million to Leisure  whereby  Leisure gave
up its beneficial interest of 5 percent of the organizational and administrative
fee and  excess  cash of TCA and any other  claims it may have had  against  the
Company, TCA and TCA's partners and former partner.

In  connection  with the  offering of the 9.50% Senior  Notes,  the Company used
approximately  $72 million to repurchase  the 12.75%  Senior Notes,  distributed
approximately $37 million to its new parent, Waterford Group, and paid the final
$2 million to Leisure.


On  December  30,  1999,  the  Authority  paid to the  holders of the  Authority
subordinated  notes,  an amount to satisfy  all  obligations  of such  Authority
subordinated  notes.  The Company received  $44,403,517  from the Authority.  On
December 30, 1999,  TCA  distributed  $10,536,543  to its partners.  The Company
received $5,268,272.

On  January  4, 2000 in  accordance  with the terms of the  9.50%  Senior  Notes
indenture,  dated as of March 17,  1999  between the  Company  and  Finance,  as
issuers,  and State Street Bank and Trust Company, as trustee,  and the Security
and  Control  Agreement,  dated as of March 17,  1999  between  the  Company and
Finance and State Street Bank and Trust Company,  $15,000,000 was transferred to
restricted investments.

On January 4, 2000 also in  accordance  with the terms of the 9.50% Senior Notes
indenture, the Company distributed $34,671,789 to its member Waterford Group.

On November 1, 2002, the Company distributed  $15,000,000 to Waterford Group, as
a Permitted  Dividend,  in  accordance  with the terms of the 9.50% Senior Notes
indenture.

In connection  with the offering of the 8.625%  Senior  Notes,  the Company used
approximately   $111.8   million  to  repurchase  the  9.50%  Senior  Notes  and
distributed $44.5 million to Waterford Group.


                                       24


<PAGE>

Tax distributions  totaling  approximately  $14,861,000 were made by the Company
during 1999, 2000, 2001, 2002, 2003 and 2004 in accordance with the terms of the
applicable  indentures.  On January 10, 2005 a tax distribution of approximately
$2,875,000 was made by the Company.

The Company  distributed the following  amounts to Waterford Group in accordance
with the terms of the 8.625% Senior Notes Indenture.

                Date of Distribution                    Amount Distributed
               ----------------------                  --------------------
                September 15, 2003                           $98,080

                March 15, 2004                              $349,247

                September 15, 2004                          $249,567

                March 15, 2005                              $294,585

Accordingly,  after taking into  consideration net income (loss) since inception
the  Company  has  a  member's   deficit  of   approximately   $109,998,000  and
$120,907,000 at December 31, 2004 and 2003, respectively.

For the years ended  December 31, 2004 and 2003,  net cash provided by operating
activities  (as shown in the  Statements  of Cash  Flows)  was  $14,502,894  and
$3,111,417, respectively.

Current assets decreased from $11,523,049 at December 31, 2003 to $10,750,950 at
December 31, 2004. The decrease was primarily  attributable to (i) the scheduled
semi-annual  payment of interest on March 15, 2004 and September 15, 2004 on the
8.625% Senior Notes in the amounts of  approximately  $6,602,000 and $6,287,000,
respectively, (ii) by the redemption on March 15, 2004 of 8.625% Senior Notes in
the principal  amount of $7,302,000,  at the redemption price of 108.625% of the
principal  amount being redeemed,  (iii) by the redemption on September 15, 2004
of 8.625% Senior Notes in the principal amount of $5,025,000,  at the redemption
price of 107.610% of the principal amount being redeemed,  (iv) by distributions
to Waterford  Group on March 15, 2004 and  September  15, 2004 of  approximately
$349,200 and $249,600,  respectively and (v) by tax distributions,  to Waterford
Group on June 11, 2004 and December  27, 2004 of  approximately  $2,005,700  and
$410,800,  respectively,  and offset by (i)  approximately  $14,502,900  of cash
provided by operating  activities and (ii) by  distributions  by TCA in terms of
the Amended and Restated Omnibus Termination Agreement.

Current liabilities decreased from $4,038,332 at December 31, 2003 to $3,728,147
at December 31, 2004. The decrease was primarily  attributable to (i) a decrease
in accrued  interest on Senior Notes payable of  approximately  $313,000 (during
the year 2004,  8.625% Senior Notes in the principal  amount of $12,327,000 were
redeemed)  and offset by (ii) an  increase  in  accrued  expenses  and  accounts
payable of  approximately  $2,900  primarily  attributable to (a) an increase in
amount due for  salaries-related  parties of  approximately  $30,700,  (b) by an
increase in amounts due for other legal services of approximately $4,600, (c) by
an increase in amounts due for insurance of  approximately  $2,700 and offset by
(d) a decrease in legal and other expenses related to the defense of the Leisure
Litigation, as detailed under PART I: Item 3 LEGAL PROCEEDINGS, of approximately
$28,200  and (e) by a  decrease  in  amounts  due  for  accounting  services  of
approximately $6,300.

For the years ended  December  31, 2004 and 2003 net cash  provided by investing
activities  (as  shown  in the  Statements  of  Cash  Flows)  was  $519,090  and
$3,720,405,  respectively. The net cash provides by investing activities in 2004
was the result of net  maturities  and  purchases of restricted  investments  of
approximately  $519,100.  The net cash provided by investing  activities in 2003
was  primarily  the  result  of  net  maturities  and  purchases  of  restricted
investments of approximately  $3,720,400 and distributions  from TCA of $450,000
and  offset  by  contributions  to TCA of  $450,000  (to fund  certain  of TCA's
development  expenses in connection with the Project  Sunburst  expansion at the
Mohegan Sun).

                                       25


<PAGE>

The Company anticipates that no additional contributions will have to be made by
the Company to TCA (to fund certain of TCA's development  expenses in connection
with the Project Sunburst expansion at the Mohegan Sun). As of December 31, 2004
$5,000,000  had been  contributed by the Company to TCA to fund certain of TCA's
development  expenses in connection with the Project  Sunburst  expansion at the
Mohegan Sun.

For the  twelve  months  ended  December  31,  2004 and  2003,  net cash used in
financing  activities (as shown in the Statements of Cash Flows) was $15,342,304
and $6,598,352,  respectively. The net cash used in financing activities in 2004
was primarily  the result of the  redemption of the 8.625% Senior Notes on March
15, 2004 and  September  15, 2004 in the  principal  amounts of  $7,302,000  and
$5,025,000, respectively, and by distributions to Waterford Group of $3,015,304.
The net cash used in financing  activities  in 2003 was  primarily the result of
the  redemption of the 9.50% Senior Notes in the principal  amount of $5,658,000
on March 15, 2003, by the  redemption of the 9.50% Senior Notes on June 11, 2003
in the principal amount of $102,349,000,  by the redemption of the 8.625% Senior
Notes on September 15, 2003 in the principal  amount of $1,912,000,  by deferred
financing costs of  approximately  $3,843,000 and by  distributions to Waterford
Group of  $47,836,321  and offset by the proceeds  from the 8.625%  Senior Notes
issuance in the principal amount of $155,000,000.

Pursuant to the terms of the 8.625% Senior Notes  Indenture,  if the Company and
Finance  have any Company  Excess  Cash,  as defined in the 8.625%  Senior Notes
Indenture, on February 1st or August 1st of any year, they must use such Company
Excess Cash less all  Required  IRA True-Up  Payments,  as defined in the 8.625%
Senior Notes Indenture, and less any amount set aside for the payment of accrued
and  unpaid  interest  on the  interest  payment  date that  corresponds  to the
redemption date for which the  determination is being made, to redeem the 8.625%
Senior Notes on the March 15th or September 15th following such dates.  Any such
redemption will be made at a price equal to a percentage of the principal amount
being redeemed.

The Company and Finance have periodically redeemed portions of the 8.625% Senior
Notes with Company  Excess Cash pursuant to the terms of the 8.625% Senior Notes
Indenture. The table below summarizes (a) the amount of Company Excess Cash that
the  Company  and  Finance  have  determined  was  available  for the  mandatory
redemption  of the 8.625%  Senior  Notes on February  1st and August 1st of each
applicable year pursuant to the terms of the 8.625% Senior Notes Indenture,  (b)
the aggregate principal amount of 8.625% Senior Notes redeemed with such Company
Excess Cash, (c) the date on which such redemption was consummated,  and (d) the
redemption price at which such redemption was made.

<TABLE>
<S>                 <C>                        <C>                      <C>                    <C>

Date                Company Excess Cash        Principal Amount of      Dates of Redemption     Price (expressed as percentage of
                    (approximately)            notes redeemed                                   principal amount being redeemed
----------------    -------------------        -------------------      --------------------    ---------------------------------
August 1, 2003        $   5,568,000              $ 1,912,000             September 15, 2003                 108.625%
February 1, 2004      $  14,534,000              $ 7,302,000               March 15, 2004                   108.625%
August 1, 2004        $  11,695,000              $ 5,025,000             September 15, 2004                 107.610%
February 1, 2005      $  12,098,000              $ 5,600,000               March 15, 2005                   107.610%
</TABLE>


The Company  expects to fund its operating,  debt service and capital needs from
cash flows from the Company's share of payments from TCA, and from the Company's
available  cash.  Based  upon  the  Company's   anticipated  future  operations,
management  believes  that  available  cash flow will be  sufficient to meet the
Company's  anticipated  requirements  for  future  operating  expenses,   future
scheduled  payments of  principal  and  interest on the 8.625%  Senior Notes and
additional  investments  in TCA  that may be  required  in  connection  with the
Project  Sunburst  expansion at the Mohegan Sun. No assurance,  however,  can be
given that the operating cash flow will be sufficient for that purpose.


                                       26
<PAGE>

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk  represents the risk of changes in value of a financial  instrument,
derivative or non-derivative,  caused by fluctuations in interest rates, foreign
exchange  rates  and  equity  prices.  Changes  in  these  factors  could  cause
fluctuations in earnings and cash flows.

For fixed rate debt,  changes in interest rates generally affect the fair market
value  of the  debt  instrument,  but not  earnings  or cash  flows.  Therefore,
interest  rate risk and  changes  in the fair  market  value of fixed  rate debt
should not have a  significant  impact on earnings or cash flows until such debt
is refinanced,  if necessary.  For variable rate debt, changes in interest rates
generally  do not impact the fair market  value of the debt  instrument,  but do
affect  future  earnings  and cash flows.  The Company did not have any variable
rate debt  outstanding  at December 31, 2004 and 2003.  The fair market value of
the  Company's  long-term  debt at December 31, 2004 and 2003 is estimated to be
approximately $150,614,000 and $163,804,000,  respectively,  based on the quoted
market price for the same issue.


The Company is exposed to market risks from  fluctuations  in interest rates and
the  effects  of those  fluctuations  on  market  values of the  Company's  cash
equivalents and restricted  investments.  Cash equivalents  generally consist of
overnight investments while the restricted  investments at December 31, 2004 are
principally comprised of an investment in a Federal Home Loan Bank Discount Note
which was  purchased  at a discount  of 1.82% and  matured  March 2, 2005 and an
investment in the First American  Treasury  Obligations  Fund. These investments
are not  significantly  exposed to interest rate risk, except to the extent that
changes in interest rates will  ultimately  affect the amount of interest income
earned and cash flow from these investments.

The Company does not currently  have any  derivative  financial  instruments  in
place to manage interest costs, but that does not mean that the Company will not
use them as a means to manage interest rate risk in the future.

The  Company  does  not use  foreign  currency  exchange  forward  contracts  or
commodity  contracts  and  does  not  have  foreign  currency  exposure  in  its
operations.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's  financial  statements and notes thereof are filed as part of this
report and appear in this annual report on Form 10-K beginning on page 35.

Item  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

None.

Item 9A.  CONTROLS AND PROCEDURES

(a)  Evaluation of Disclosure Controls and Procedures

The Company  maintains  disclosure  controls and procedures that are designed to
ensure that information  required to be disclosed in the Company's  Exchange Act
reports, is recorded, processed, summarized and reported within the time periods
specified  in the  Commission's  rules and forms  and that such  information  is
accumulated and  communicated to the Company's  management,  including its Chief
Executive  Officer and Chief Financial  Officer,  as  appropriate,  to allow for
timely decisions regarding required disclosure. In designing, and evaluating the
disclosure controls and procedures,  management recognizes that any controls and
procedures,  no  matter  how  well  designed  and  operated,  can  provide  only
reasonable  assurance of achieving  the desired  objectives,  and  management is
required to apply its judgment in evaluating  the cost benefit  relationship  of
possible controls and procedures.

As  required  by the  Commission  Rule  13a-15(b),  the  Company  carried out an
evaluation,  under the supervision and with the  participation  of the Company's
management,  including the Company's Chief  Executive  Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as of the end of the period covered
by this report. Based on the foregoing evaluation, the Company's Chief Executive
Officer and Chief  Financial  Officer  concluded  that the Company's  disclosure
controls and procedures were effective at the reasonable assurance level.

(b)  Changes in Internal Controls

There has been no change  in the  Company's  internal  controls  over  financial
reporting during the Company's most recent quarter that has materially affected,
or is reasonably likely to materially affect, the Company's internal controls or
financial reporting.
                                       27


<PAGE>

                                    PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following tables sets forth certain  information with respect to persons who
are  members  of the Board of  Directors  of the  Company  or who are  Executive
Officers of the Company.

NAME                       AGE                     POSITION
----                       ---                     --------
Len Wolman                 50            Chairman of the Board and Chief
                                         Executive Officer
Alan Angel                 48            Chief Financial Officer
Del J. Lauria              56            Director and Secretary
Mark Wolman                47            Director
Stephan F. Slavik          58            Director
Richard Slavik             54            Vice President


LEN WOLMAN.  Mr. Len Wolman has been the Chairman of the Board of Directors  and
the Chief  Executive of the Company  since its  formation.  Since 1986,  Mr. Len
Wolman has been the Chairman of the Board of Directors  and the Chief  Executive
Officer of the  Waterford  Hotel  Group,  Inc.  Mr. Len Wolman is the  Company's
designated  representative to TCA under the TCA Partnership  Agreement.  Mr. Len
Wolman was  instrumental  in the formation of the  relationship  between Trading
Cove and the Mohegan Tribe and had been actively  working with the Mohegan Tribe
in connection  with obtaining  federal  recognition,  acquiring the site for the
Mohegan Sun and  obtaining  the  financing to construct the Mohegan Sun. Mr. Len
Wolman was actively  involved in the development,  construction and operation of
the Mohegan  Sun.  Mr. Len Wolman has served as  President  and Chief  Executive
Officer of Finance since its inception. Mr. Len Wolman is a Director and Officer
of Slavik,  one of the Waterford Group's members.  Mr. Len Wolman is the brother
of Mr. Mark Wolman. Mr. Len Wolman's wife and Mr. Angel's wife are sisters.

ALAN ANGEL.  Mr. Angel became Chief Financial  Officer of the Company in January
1999.  Since  1997,  Mr.  Angel has been the Chief  Financial  Officer of Mystic
Suites, L.L.C. Mystic Suites,  L.L.C. is a commercial  development firm based in
Eastern  Connecticut which currently holds an ownership  interest in a number of
hotels  managed by the  Waterford  Hotel  Group,  Inc.  Prior to joining  Mystic
Suites,  L.L.C., Mr. Angel resided in South Africa and served as Chief Financial
Officer of Rowan & Angel cc. Mr. Angel is a certified  public  accountant  and a
chartered accountant.  Mr. Angel has over 20 years of accounting experience. Mr.
Angel's wife and Mr. Len Wolman's wife are sisters.

DEL J.  LAURIA.  Mr.  Lauria  became a  Director,  Chief  Financial  Officer and
Secretary of the Company upon its  formation.  Mr. Lauria was succeeded as Chief
Financial  Officer in January  1999 by Mr.  Alan  Angel.  Mr.  Lauria is also an
Officer and Director of the Waterford  Hotel Group,  Inc. and is Executive  Vice
President   and  Director  of  Slavik.   Mr.  Lauria  first  joined  the  Slavik
Organization in 1980 as the Chief Financial  Officer of its real estate property
management  division.  The Slavik  Organization  is an affiliated  group of full
service real estate companies first  established in Michigan in the early 1950s.
Mr. Lauria  rapidly  advanced at the Slavik  Organization  and  currently  holds
various key managerial  positions  within the  enterprise.  Prior to joining the
Slavik  Organization,  Mr. Lauria was associated  with the  accounting  firm now
known as Deloitte &Touchee and is a certified public accountant.  Mr. Lauria has
served as Treasurer and Secretary of Finance since its inception.

MARK  WOLMAN.  Mr.  Mark  Wolman  became  a  Director  of the  Company  upon its
formation.  Mr. Mark Wolman is the president of Wolman Homes, Inc. Wolman Homes,
Inc.  is a  commercial  development  and  construction  firm  based  in  Eastern
Connecticut.  Mr. Mark Wolman has been working with the Mohegan Tribe since 1992
and had been  instrumental  in assisting the Mohegan Tribe in obtaining a number
of governmental approvals in connection with the development and construction of
the Mohegan Sun. Mr. Mark Wolman is a Director of Slavik. Mr. Mark Wolman is the
brother of Mr. Len Wolman.

STEPHAN F. SLAVIK.  Mr.  Slavik was appointed a Director of the Company on April
9, 2001.  Mr. Slavik is the  President of Michigan  based Slavik  Builders.  Mr.
Slavik has over 30 years of experience with all phases of land planning, product
design,  estimating  and  site  construction  in  single  family,  multiple  and
commercial  design/build  developments.  Mr.  Slavik  is  a  Director  and  Vice
President of Slavik. Mr. Slavik is the brother of Mr. Richard Slavik.

MR.  RICHARD  SLAVIK.  Mr.  Richard Slavik was appointed a Vice President of the
Company on April 9, 2001. Mr. Richard Slavik is Chief  Operating  Officer of the
Fourmidable  Group,  Inc., a Michigan  based real estate  management  firm.  Mr.
Richard  Slavik  has over 20  years of  constructing  and  operating  commercial
residential real estate  experience.  Mr. Richard Slavik is President of Slavik.
Mr. Richard Slavik is the brother of Mr. Stephan F. Slavik.

In light of the  Company's  limited  operations  and the fact that the Company's
interest in TCA is its principal  asset and source of income and cash flow,  the
Company has not adopted a code of ethics that applies to the Company's principal
executive officer,  principal financial officer, principal accounting officer or
controller, or persons performing similar functions.

                                       28


<PAGE>

Item 11. EXECUTIVE COMPENSATION

The following table  summarizes the  compensation  paid to the Directors and the
named Executive Officers of the Company.


NAME                      YEAR ENDED                SALARY
----                      ----------                ------
Len Wolman(i)                2004               $  1,217,420
                             2003               $    900,998
                             2002               $    835,086

Del Lauria                   2004               $        -
                             2003               $        -
                             2002               $        -

Stephan F. Slavik            2004               $        -
                             2003               $        -
                             2002               $        -

Mark Wolman                  2004               $        -
                             2003               $        -
                             2002               $        -

Alan Angel                   2004               $        -
                             2003               $        -
                             2002               $        -

Richard Slavik               2004               $        -
                             2003               $        -
                             2002               $        -

(i) As detailed in Item 13, Mr. Len Wolman has an  employment  contract with the
Company.  For the years ended  December  31,  2004,  2003 and 2002,  $1,217,420,
$900,998 and $835,086, respectively, was incurred by the Company pursuant to the
employment contract.

From January 1, 2000, the Company's Directors have also received compensation as
part of the  operating  expenses of TCA as detailed  under point a) of the table
set forth above under "Amended and Restated Omnibus Termination Agreement".  The
Company does not have a compensation  committee,  and all compensation decisions
are made by the Board of Directors.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The Company's sole member is Waterford Group, L.L.C.

The following  table sets forth the beneficial  ownership  interest in Waterford
Group, L.L.C.


NAME OF                                                         % OWNERSHIP
BENEFICIAL OWNER                                              IN THE COMPANY
----------------                                              --------------
LMW Investments, Inc.(i)..................................        32.2033%
Slavik Suites, Inc.(ii)...................................        67.7967%
                                                              --------------
                                                                       100.0000%
                                                              ==============

(i) LMW  Investments,  Inc.  is owned 50% by Mr. Len Wolman and 50% by Mr.  Mark
Wolman. The address for LMW Investments, Inc. is 914 Hartford Turnpike, P.O. Box
715, Waterford, Connecticut 06385.

(ii)  Messrs.  Len  and  Mark  Wolman  each  own  approximately  11.875%  of the
outstanding shares of Slavik Suites, Inc. Messrs.  Stephan F. Slavik and Richard
Slavik each own approximately 14.35% of the outstanding shares of Slavik Suites,
Inc. The address for Slavik Suites,  Inc. is 32605 West 12 Mile Road, Suite 350,
Farmington Hills, Michigan 48334.

The Company does not currently have in place any equity compensation plans.


                                       29

<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  DEVELOPMENT SERVICES AGREEMENT PHASE II AND RELATED AGREEMENTS AND PAYMENTS

As noted in the  section  above  entitled  "Business - Trading  Cove  Associates
Material Agreements - Development Agreement and Related Agreements", on February
9, 1998,  TCA and KIML,  an  affiliate  of Kerzner  Investments,  the  Company's
partner  in TCA,  entered  into the  Development  Services  Agreement  Phase II.
Pursuant to the Development  Services Agreement Phase II, TCA subcontracted with
KIML, who agreed to perform those  services  assigned to KIML by TCA in order to
facilitate  TCA's  fulfillment  of its duties and  obligations  to the Authority
under  the  Development  Agreement.   KIML  assigned  the  Development  Services
Agreement Phase II to Kerzner Investments.

Pursuant to the  Development  Services  Agreement  Phase II, TCA pays to Kerzner
Investments the Development Services Fee Phase II, which equals 3 percent of the
development  costs of the  Project  Sunburst  expansion,  excluding  capitalized
interest, less all costs incurred by TCA in connection with the Project Sunburst
expansion.  At December 31, 2004 all of TCA's costs  associated with the Project
Sunburst  expansion  had not been paid,  however  reasonable  estimates of those
costs have been provided for in TCA's financial statements at December 31, 2004.
The  Development  Services  Fee  Phase  II is paid in  three  installments  - on
December 31, 1999,  December 31, 2000 and on the Completion  Date, as defined in
the  Development  Agreement - with the final  payment being made when the actual
development  costs of the Project  Sunburst  expansion  are known.  TCA pays the
Development  Services  Fee  Phase  II from  available  cash  flow,  if  any,  in
accordance  with the Amended and Restated  Omnibus  Termination  Agreement.  The
total of the  Development  Services Fee Phase II and TCA's costs  related to the
development of the Project  Sunburst  expansion will exceed the related  revenue
received by TCA under the Development Agreement by approximately $15,964,000.

Before KIML  assigned the  Development  Services  Agreement  Phase II to Kerzner
Investments,  it entered into the Local  Construction  Services  Agreement  with
Construction, an affiliate of the Company, pursuant to which Construction agreed
to provide  certain of those  services  assigned to KIML by TCA  pursuant to the
Development  Services  Agreement Phase II. KIML assigned the Local  Construction
Services Agreement to Kerzner Investments.

Pursuant  to the Local  Construction  Services  Agreement,  Kerzner  Investments
agreed to pay to  Construction  a fee equal to 20.83 percent of the  Development
Services Fee Phase II as and when Kerzner Investments  receives payment from TCA
in accordance with the Development Services Agreement Phase II.

Pursuant to a letter agreement,  Construction has subcontracted  with The Slavik
Company,  an affiliate of the Company,  to provide  certain  services  under the
Local Construction Services Agreement.  In exchange for providing such services,
Construction  agreed that The Slavik  Company would be paid a fee equal to 14.30
percent of its fee under the Local Construction Services Agreement.

On April 26, 2000,  July 26,  2000,  January 26, 2001 and July 28, 2003 TCA paid
$3,095,000,  $1,238,000,  $6,474,000 and  $9,157,000,  respectively,  as partial
payment  of  the  Development  Services  Fee  Phase  II.  Construction  received
$644,688, $257,875,  $1,348,534, and $1,907,403,  respectively, and Construction
paid The Slavik  Company  $92,190,  $36,876,  $192,840 and $259,121 on April 26,
2000, July 26, 2000, January 26, 2001 and July 28, 2003, respectively.

At December 31, 2004 the accrued  liability to Kerzner  Investments  pursuant to
the Development Services Agreement Phase II was approximately $414,000.

The Development Services Agreement Phase II and the Local Construction  Services
Agreement  are each filed as an exhibit to the  Company's,  Quarterly  Report on
Form 10-Q for the period ended March 31, 1999 (Commission File No. 333-17795) as
accepted by the Commission on May 17, 1999, and each is  incorporated  herein by
reference.


                                       30

<PAGE>

                    EMPLOYMENT AGREEMENT WITH MR. LEN WOLMAN

Len Wolman, the Company's Chairman of the Board of Directors and Chief Executive
Officer,  is the  Company's  designated  representative  to TCA  under  the  TCA
Partnership Agreement.

On September 28, 1998, the Company entered into an employment agreement with Len
Wolman.  The employment  agreement provides for a base annual salary of $250,000
reduced by any amounts Mr. Wolman receives as a salary from TCA for such period.
In addition, pursuant to the employment agreement, the Company agreed pay to Mr.
Wolman an amount  equal to 0.05  percent  of the  revenues  of the  Mohegan  Sun
including  the  Project  Sunburst  expansion  to the extent  Mr.  Wolman has not
received such amounts from TCA. On and after January 1, 2004, the Company agreed
to pay to Mr. Wolman incentive compensation based on the revenues of the Mohegan
Sun,  including the Project Sunburst  expansion,  as a percentage  (ranging from
0.00 percent to 0.10 percent) to be determined  using a formula  attached to the
employment  agreement,  which compares actual revenues to predetermined  revenue
targets.  For the years ended  December  31,  2004,  2003 and 2002,  the Company
incurred $1,217,420, $900,998 and $835,086, respectively, as an expense pursuant
to Len Wolman's employment agreement.

                        OTHER RELATED PARTY TRANSACTIONS

For the years ended  December 31, 2004,  2003, and 2002  approximately  $42,000,
$42,000  and  $46,000,  respectively,  was  paid  and  incurred  by  TCA  to the
principals and affiliates of the Company as part of TCA's operating expenses. In
addition, in 2004, 2003 and 2002 TCA incurred approximately  $935,000,  $920,000
and, $0,  respectively,  to the principals of the Company in connection with the
first  priority  payments  set forth under the section  "Business - Trading Cove
Associates  Material  Agreements  - Amended  and  Restated  Omnibus  Termination
Agreement".

In 1999, the Company  renovated Len Wolman's  office space at a cost of $32,413,
of which  $30,000 was paid to Wolman  Homes Inc.,  an  affiliate of the Company.
Cost of the improvement is being  depreciated  over five years.  Expense for the
years  ended  December  31,  2004,  2003 and 2002 was $553,  $6,480 and  $6,480,
respectively.

Waterford Group, Slavik Suites, Inc. and the other principals of the Company and
Waterford  Group  have  interests  in and may  acquire  interests  in  hotels in
Southeastern  Connecticut  which have or may have  arrangements with the Mohegan
Sun to reserve and provide hotel rooms to patrons of the Mohegan Sun.

ITEM 14. PRINCIPAL ACCOUNTANT'S FEES AND SERVICES

For the year ended December 31, 2004

Audit fees                                              $  44,250
Tax fees                                                      750
All other fees
     Excess cash certification                              2,250

 Total                                                  ---------
                                                        $  47,250
                                                        =========

For the year ended December 31, 2003

Audit fees                                              $ 264,000
Tax fees                                                    2,250
All other fees
    Analyses of proposed buyout of a contract              17,250
                                                        ---------
 Total                                                  $ 283,500
                                                        =========



                                       31



<PAGE>

                                     PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

a) EXHIBITS

               Exhibit No.    Description
                 3.1          Certificate of Formation, as amended, of Waterford
                              Gaming, LLC (i)
                 3.2          Certificate of Incorporation of Waterford Gaming
                              Finance Corp. (i)
                 3.3          Bylaws of Waterford Gaming Finance
                              Corp. (i)
                 4.1          Indenture, dated as of November 8, 1996, between
                              Waterford Gaming, L.L.C. and Waterford Gaming
                              Finance Corp., the issuers, and Fleet National
                              Bank, as trustee, relating to $65,000,000 12-3/4%
                              Senior Notes due 2003. (i)
                 4.1.1        First Supplemental Indenture, dated as of March 4,
                              1999, among Waterford Gaming, L.L.C. and Waterford
                              Gaming Finance, Corp., as issuers, and State
                              Street Bank and Trust Company, as trustee,
                              relating to $65,000,000 12-3/4% Senior Notes due
                              2003.  (vi)
                 4.2          Indenture, dated as of March 17, 1999, among
                              Waterford Gaming, L.L.C. and Waterford Gaming
                              Finance Corp., as issuers, and State Street Bank
                              and Trust Company, as trustee, relating to
                              $125,000,000 9-1/2% Senior Notes
                              due 2010. (vi)
                 4.2.1        First Supplemental Indenture, dated as of June 6,
                              2003, among Waterford Gaming, L.L.C. and Waterford
                              Gaming Finance Corp., as issuers, and U.S. Bank
                              National Association, as trustee, relating to
                              $125,000,000 9-1/2% Senior Notes due 2010. (viii)
                 4.3          Security and Control Agreement, dated as of March
                              17, 1999, among Waterford Gaming, L.L.C. and
                              Waterford Gaming Finance Corp., as pledgors and
                              State Street Bank and Trust Company, as securities
                              intermediary. (vi)
                 4.3.1        Termination Agreement, dated as of June 11,
                              2003, among Waterford Gaming, L.L.C. and
                              Waterford Gaming Finance Corp., and
                              U.S. Bank National Association, as securities
                              intermediary. (viii)
                 4.4          Specimen Form of 9-1/2% Senior Notes due 2010
                              (included in Exhibit 4.2).  (vi)
                 4.5          Indenture, dated as of June 11, 2003, among
                              Waterford Gaming, L.L.C. and Waterford Gaming
                              Finance Corp., as issuers, and U.S. Bank National
                              Association, as trustee, relating to $155,000,000
                              8-5/8% Senior Notes due 2012. (viii)
                 4.6          Security and Control Agreement, dated as of
                              June 11, 2003, among Waterford Gaming, L.L.C. and
                              Waterford Gaming Finance Corp., as pledgors and
                              U.S. Bank National Association, as securities
                              intermediary. (viii)
                 4.7          Specimen Form of 8-5/8% Senior Notes due 2012
                              (included in Exhibit 4.5). (viii)
                 10.1         Omnibus Financing Agreement, dated as of September
                              21, 1995, between Trading Cove Associates and Sun
                              International Hotels Limited. (i)
                 10.2         First Amendment to the Omnibus Financing
                              Agreement, dated as of October 19, 1996, among
                              Trading Cove Associates, Sun International Hotels
                              Limited and Waterford Gaming, L.L.C. (i)
                 10.2.1       Amended and Restated Omnibus Financing Agreement
                              dated September 10, 1997 (ii)
                 10.2.2       Omnibus Termination Agreement, dated as of March
                              18, 1999, among Sun International Hotels Limited,
                              Trading Cove Associates, Waterford Gaming,
                              L.L.C., Sun International Management Limited, LMW
                              Investments, Inc., Sun Cove Limited, Slavik
                              Suites, Inc., and Wolman Construction, L.L.C.(vi)
                 10.2.3       Amended and Restated Omnibus Termination
                              Agreement,  dated as of January 1, 2000 and
                              effective as of March 18, 1999, among Sun
                              International  Hotels Limited, Trading  Cove
                              Associates, Waterford Gaming, L.L.C., Sun
                              International Management Limited, LMW
                              Investments, Inc., Sun Cove Limited, Slavik
                              Suites, Inc., and Wolman Construction, L.L.C.(vii)
                 10.3         Amended and Restated Partnership Agreement of
                              Trading Cove Associates, dated as of September 21,
                              1994, among Sun Cove Limited, RJH Development
                              Corp., Leisure Resort Technology, Inc., Slavik
                              Suites , Inc., and LMW Investments, Inc. (i)



                                       32
<PAGE>


                 10.4         First Amendment to Amended and Restated
                              Partnership Agreement of Trading Cove Associates,
                              dated as of October 22, 1996, among Sun Cove
                              Limited, Slavik Suites, Inc., RJH Development
                              Corp., LMW Investments, Inc. and Waterford Gaming,
                              L.L.C. (i)
                 10.5         Purchase Agreement, dated as of March 10, 1999,
                              among Waterford Gaming, L.L.C., Waterford Gaming
                              Finance Corp., Bear, Stearns & Co., Inc., Merrill
                              Lynch, Pierce, Fenner and Smith Inc. and Salomon
                              Smith Barney. (vi)
                 10.5.1       Agreement with Respect to Redemption or Repurchase
                              of Subordinated Notes, dated September 10,
                              1997 (ii)
                 10.6         Amended and Restated Limited Liability Company
                              Agreement of Waterford Gaming, L.L.C., dated as of
                              March 17, 1999 by Waterford Group, L.L.C.  (vi)
                 10.7         Note Purchase Agreement, dated as of October 19,
                              1996, among Sun International Hotels Limited,
                              Waterford Gaming, L.L.C. and Trading Cove
                              Associates. (i)
                 10.8         Note Purchase Agreement, dated as of September 29,
                              1995, between the Mohegan Tribal Gaming Authority
                              and Sun International Hotels Limited relating to
                              the Subordinated Notes. (i)
                 10.9         Management Agreement, dated as of July 28, 1994,
                              between the Mohegan Tribe of Indians of
                              Connecticut and Trading Cove Associates. (i)
                 10.10        Management Services Agreement, dated September 10,
                              1997. (ii)
                 10.11        Development Services Agreement, dated September
                              10, 1997. (ii)
                 10.12        Subdevelopment Services Agreement, dated September
                              10, 1997. (ii)
                 10.13        Completion Guarantee and Investment Banking and
                              Financing Arrangement Fee Agreement, dated
                              September 10, 1997. (ii)
                 10.14        Settlement and Release Agreement, dated January 6,
                              1998, by and among Leisure Resort Technology,
                              Inc., Lee R. Tyrol, Trading Cove Associates,
                              Slavik Suites, Inc., LMW Investments, Inc., RJH
                              Development Corp., Waterford Gaming, L.L.C. and
                              Sun Cove Limited. (iii)
                 10.15        Waiver and Acknowledgment of Noteholder. (iv)
                 10.16        Relinquishment Agreement, dated February 7, 1998,
                              between the Mohegan Tribal Gaming Authority and
                              Trading Cove Associates.  (v)
                 10.17        Development Services Agreement, dated February 7,
                              1998, between the Mohegan Tribal Gaming Authority
                              and Trading Cove Associates.  (v)
                 10.18        Agreement, dated September 28, 1998, by and among,
                              Waterford Gaming, L.L.C., Slavik Suites, Inc., LMW
                              Investments, Inc., Len Wolman, Mark Wolman,
                              Stephan F. Slavik, Sr. and Del J. Lauria (Len
                              Wolman's Employment Agreement).  (v)
                 10.19        Agreement Relating to Development Services, dated
                              as of February 9, 1998, between Trading Cove
                              Associates and Sun International Management
                              Limited.  (vi)
                 10.20        Local Construction Services Agreement, dated as of
                              February 9, 1998 between Sun International
                              Management Limited and Wolman Construction,
                              L.L.C. (vi)
                 10.21        Escrow Deposit Agreement,  dated as of the 3rd day
                              of March  1999,  by and among the  Mohegan  Tribal
                              Gaming Authority and First Union National Bank, as
                              Defeasance Agent. (vi)
                 21.1         Subsidiaries of Waterford Gaming,
                              L.L.C. (i)
                 21.2         Subsidiaries of Waterford Gaming Finance Corp. (i)
                 31           Certifications.  (ix)


                                       33


<PAGE>

     (i)  Incorporated by reference to the Registrant's  Registration  Statement
          on Form S-4, Commission File No. 333-17795,  declared effective on May
          15, 1997.

    (ii)  Incorporated by reference to the Registrant's Quarterly Report on Form
          10-Q for the period  ended  September  30, 1997,  Commission  File No.
          333-17795, as accepted by the Commission on November 14, 1997.

    (iii) Incorporated  by reference to the  Registrant's  Annual Report on Form
          10-K for the fiscal year ended December 31, 1997,  Commission File No.
          333-17795, as accepted by the Commission on March 30, 1998.

    (iv)  Incorporated by reference to the Registrant's Quarterly Report on Form
          10-Q  for the  period  ended  March  31,  1998,  Commission  File  No.
          333-17795, as accepted by the Commission on May 14, 1998.

    (v)   Incorporated by reference to the Registrant's Quarterly Report on Form
          10-Q for the period  ended  September  30, 1998,  Commission  File No.
          333-17795, as accepted by the Commission on November 13, 1998.

    (vi)  Incorporated by reference to the Registrant's Quarterly Report on Form
          10-Q  for the  period  ended  March  31,  1999,  Commission  File  No.
          333-17795 as accepted by the Commission on May 17, 1999.

    (vii) Incorporated by reference to the Registrant's Quarterly Report on Form
          10-Q  for the  period  ended  March  31,  2001,  Commission  File  No.
          333-17795 as accepted by the Commission on May 14, 2001.

    (viii)Incorporated by reference to the Registrant's Quarterly Report on Form
          10-Q for the period ended June 30, 2003, Commission File No. 333-17795
          as accepted by the Commission on August 12, 2003.

    (ix) Filed herewith.


                                       34

<PAGE>

b) FINANCIAL STATEMENTS SCHEDULES



INDEX TO FINANCIAL STATEMENTS


WATERFORD GAMING, L.L.C.
Report of Independent Registered Public Accounting Firm         F-1
Financial Statements:
Balance Sheets as of December 31, 2004 and 2003                 F-2
Statements of Income for the years ended
        December 31, 2004, 2003 and 2002                        F-3
Statements of Changes in Member's Deficiency for the
        years ended December 31, 2004, 2003 and 2002            F-4
Statements of Cash Flows for the years ended
        December 31, 2004, 2003 and 2002                        F-5
Notes to Financial Statements                                   F-6

TRADING COVE ASSOCIATES
Report of Independent Registered Public Accounting Firm         F-18
Financial Statements:
Balance Sheets as of December 31, 2004 and 2003                 F-19
Statements of Operations for the years ended
        December 31, 2004, 2003 and 2002                        F-20
Statements of Changes in Partners' Capital
        for the years ended
        December 31, 2004, 2003 and 2002                        F-21
Statements of Cash Flows for the years ended
        December 31, 2004, 2003 and 2002                        F-22
Notes to Financial Statements                                   F-23



                                       35

<PAGE>

               REPORT OF INDEPENDENT REGISTERED PUBIC ACCOUNTING FIRM


To the Member of Waterford Gaming, L.L.C.

In our opinion,  the accompanying  balance sheets and the related  statements of
income,  changes in member's deficiency and of cash flows present fairly, in all
material  respects,  the financial  position of Waterford  Gaming,  L.L.C.  (the
"Company") at December 31, 2004 and 2003 and the results of its  operations  and
its cash flows for each of the three years in the period ended December 31, 2004
in conformity with accounting principles generally accepted in the United States
of America.  These financial  statements are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  We conducted our audits of these statements in
accordance with the standards of the Public Company  Accounting  Oversight Board
(United States).  Those standards  require that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers, LLP
Hartford, CT
March 15, 2005


                                       F-1


<PAGE>


                            Waterford Gaming, L.L.C.

                                 Balance Sheets

                           December 31, 2004 and 2003

                        ---------------------------------
<TABLE>
<CAPTION>


<S>                                                                              <C>                       <C>
                                                                                        2004                      2003
                                                                                  ---------------           ---------------

                   ASSETS

Current assets
     Cash and cash equivalents                                                      $  4,571,752              $  4,892,072
     Restricted investments                                                            6,104,635                 6,623,725
     Other current assets                                                                 74,563                     7,252
                                                                                  ---------------           ---------------

        Total current assets                                                          10,750,950                11,523,049
                                                                                  ---------------           ---------------

Trading Cove Associates - equity investment                                           17,052,615                16,965,487
Beneficial interest - Leisure Resort Technology, Inc.                                  3,784,059                 4,162,049
Deferred financing costs, net of accumulated amortization of $939,890
        and $274,972 at December 31, 2004 and 2003, respectively                       2,903,141                 3,568,059
Fixed assets, net of accumulated depreciation of $53,918 and $53,002 at
        December 31, 2004 and 2003, respectively                                            ---                        916
                                                                                  ---------------           ---------------

        Total assets                                                                $ 34,490,765              $ 36,219,560
                                                                                  ===============           ===============


                   LIABILITIES AND MEMBER'S DEFICIENCY

Current liabilities
     Accrued expenses and accounts payable                                          $    153,404              $    150,535
     Accrued interest on senior notes payable                                          3,574,743                 3,887,797
                                                                                  ---------------           ---------------

        Total current liabilities                                                      3,728,147                 4,038,332
                                                                                  ---------------           ---------------

8.625% senior notes payable                                                          140,761,000               153,088,000
                                                                                  ---------------           ---------------

        Total liabilities                                                            144,489,147               157,126,332
                                                                                  ---------------           ---------------

Commitments and contingent liabilities

Member's deficiency                                                                 (109,998,382)             (120,906,772)
                                                                                  ---------------           ---------------

        Total liabilities and member's deficiency                                   $ 34,490,765              $ 36,219,560
                                                                                  ===============           ===============



The accompanying notes are an integral part of these financial statements.

                                       F-2

</TABLE>


<PAGE>



                            Waterford Gaming, L.L.C.

                              Statements of Income

              For the years ended December 31, 2004, 2003 and 2002


                          -----------------------------
<TABLE>
<CAPTION>
                                                                    2004                     2003                   2002
                                                                -------------           -------------          -------------

<S>                                                            <C>                     <C>                    <C>
Expenses
      Interest expense                                          $ 13,588,087            $ 19,481,783           $ 11,080,139
      Salaries - related parties                                   1,217,420                 900,998                835,086
      General and administrative                                     848,214                 552,586                431,223
      9.50% senior notes tender expense                                  ---                 509,414                    ---
      Amortization of beneficial interest -
         Leisure Resort Technology, Inc.                             377,990                 377,990                377,990
      Amortization on deferred financing costs                       664,918               2,918,310                366,864
      Depreciation                                                       916                  10,780                 10,780
                                                                -------------           -------------          -------------

              Total expenses                                      16,697,545              24,751,861             13,102,082
                                                                -------------           -------------          -------------


      Interest and dividend income                                   117,608                 123,634                534,012
      Equity in income of
         Trading Cove Associates                                  30,503,631              28,519,860             24,601,380
                                                                -------------           -------------          -------------

              Net income                                        $ 13,923,694            $  3,891,633           $ 12,033,310
                                                                =============           =============          =============


The accompanying notes are an integral part of these financial statements.

                                       F-3

</TABLE>

<PAGE>


                            Waterford Gaming, L.L.C.

                  Statements of Changes in Member's Deficiency

              For the years ended December 31, 2004, 2003 and 2002


                      -------------------------------
<TABLE>
<CAPTION>

<S>                                                         <C>
Balance, January 1, 2002                                     $  (70,474,832)

Distributions                                                   (18,520,562)

Net income                                                       12,033,310
                                                             ---------------

Balance, December 31, 2002                                      (76,962,084)

Distributions                                                   (47,836,321)

Net income                                                        3,891,633
                                                             ---------------

Balance, December 31, 2003                                     (120,906,772)

Distributions                                                    (3,015,304)

Net income                                                       13,923,694
                                                             ---------------

Balance, December 31, 2004                                   $ (109,998,382)
                                                             ===============



The accompanying notes are an integral part of these financial statements.

                                       F-4

</TABLE>
<PAGE>



                            Waterford Gaming, L.L.C.

                            Statements of Cash Flows

              For the years ended December 31, 2004, 2003 and 2002


                          -----------------------------
<TABLE>
<S>                                                                        <C>              <C>              <C>
                                                                                2004             2003             2002
                                                                           -------------     -------------    -------------

Cash flows from operating activities
    Net income                                                             $ 13,923,694      $  3,891,633     $ 12,033,310
                                                                           -------------     -------------    -------------

    Adjustments to reconcile net income
        to net cash provided by operating activities
           Amortization                                                       1,042,908         3,296,300          744,854
           Depreciation                                                             916            10,780           10,780
           Equity in income of Trading Cove Associates                      (30,503,631)      (28,519,860)     (24,601,380)
           Operating distributions from Trading Cove Associates              30,416,503        23,526,711       22,718,604
           Changes in operating assets and liabilities
              Other current assets                                              (67,311)              713            1,107
              Accrued expenses and accounts payable                               2,869            38,539          (59,614)
              Accrued interest on senior notes payable                         (313,054)          866,601         (207,750)
                                                                           -------------     -------------    -------------
                      Total adjustments                                         579,200          (780,216)      (1,393,399)
                                                                           -------------     -------------    -------------

                      Net cash provided by
                           operating activities                              14,502,894         3,111,417       10,639,911
                                                                           -------------     -------------    -------------

Cash flows from investing activities
    Maturities and (purchases) of restricted investments - net                  519,090         3,720,405       15,845,304
    Contributions to Trading Cove Associates                                        ---          (450,000)      (1,000,000)
    Distributions from Trading Cove Associates                                      ---           450,000        1,550,000
                                                                           -------------     -------------    -------------
                      Net cash provided by
                           investing activities                                 519,090         3,720,405       16,395,304
                                                                           -------------     -------------    -------------

Cash flows from financing activities
    Redemption of  8.625% senior notes payable                              (12,327,000)       (1,912,000)             ---
    Distributions to member                                                  (3,015,304)      (47,836,321)     (18,520,562)
    Proceeds from 8.625% senior notes issuance                                      ---       155,000,000              ---
    Deferred financing costs                                                        ---        (3,843,031)             ---
    Redemption of  9.50% senior notes payable                                       ---      (108,007,000)      (7,427,000)
                                                                           -------------     -------------    -------------
                      Net cash used in
                           financing activities                             (15,342,304)       (6,598,352)     (25,947,562)
                                                                           -------------     -------------    -------------

                      Net change in cash and cash equivalents                  (320,320)          233,470        1,087,653

Cash and cash equivalents

Beginning of year                                                             4,892,072         4,658,602        3,570,949
                                                                           -------------     -------------    -------------
End of year                                                                $  4,571,752      $  4,892,072     $  4,658,602
                                                                           =============     =============    =============


Supplemental disclosure of cash flow information:
    Cash paid during the year for interest                                 $ 13,901,141      $ 18,615,181     $ 11,287,889
                                                                           =============     =============    =============


The accompanying notes are an integral part of these financial statements.

                                       F-5

</TABLE>

<PAGE>

                            WATERFORD GAMING, L.L.C.

                          NOTES TO FINANCIAL STATEMENTS

ORGANIZATION, MEMBERSHIP AGREEMENT, CHANGE OF OWNERSHIP AND MEMBER ALLOCATIONS:

Waterford Gaming, L.L.C. (the "Company"),  a Delaware limited liability company,
was formed on September  30,  1996.  The Company  initially  acquired and owns a
partnership  interest in Trading Cove Associates  ("TCA"), a Connecticut general
partnership,  and invested in certain notes issued by the Mohegan  Tribal Gaming
Authority  (the  "Authority").  The Company is governed by a Board of  Directors
pursuant to the limited liability company agreement (the  "Agreement").  In June
2003,  the Company with its  wholly-owned  subsidiary  Waterford  Gaming Finance
Corp.  ("Finance") issued $155 Million 8.625% Senior Notes due 2012 (the "8.625%
Senior Notes") in connection  with the redemption of the Company's and Finance's
$125 Million 9.5% Senior Notes due 2010 (the "$125 Million  Senior  Notes").  In
March 1999, the Company together with Finance had issued the $125 Million Senior
Notes in  connection  with the  redemption  of the  Company's  and Finance's $65
Million  12.75%  Senior  Notes due 2003 (the "$65  Million  Senior  Notes").  In
connection  with the issuance by the Company's and Finance's $125 Million Senior
Notes, each of Slavik Suites, Inc. ("Slavik") and LMW Investments,  Inc. ("LMW")
contributed their respective  interests in the Company as of March 17, 1999 to a
Delaware limited liability company, Waterford Group, L.L.C. ("Waterford Group").
Waterford  Group is now the  sole  member  of the  Company.  Slavik  and LMW own
Waterford Group in the same respective interest as they had in the Company which
are as follows:


Slavik Suites, Inc.                     67.7967%
LMW Investments, Inc.                   32.2033%
                                       ---------
                                       100.0000%
                                       =========


The Agreement is effective until September 30, 2020 and may be terminated by the
member or any other event as stated in the Agreement.

Fianance has no activity and maintains only $100 in cash.  Therefore,  it is not
consolidated in the accompanying financial statements of the Company.

In  connection  with  the  $125  Million  Senior  Notes  offering,  the  Company
distributed  $37,050,000 to Waterford Group,  L.L.C.  during March 1999.  During
December  1999,  the  Company  received  a payment on notes it held due from the
Authority  and a  distribution  from TCA. As  contemplated  in the $125  Million
Senior Notes  offering,  the Company  distributed  approximately  $34,672,000 to
Waterford Group during January 2000. On November 1, 2002 the Company distributed
$15,000,000  to Waterford  Group in  accordance  with the terms of the indenture
relating to the $125 Million Senior Notes.  In connection with the 8.625% Senior
Notes offering, the Company distributed  approximately  $44,500,000 to Waterford
Group during June 2003. Tax  distributions  totaling  approximately  $14,861,000
were made by the Company  during  1999,  2000,  2001,  2002,  2003 and 2004.  On
January 10, 2005 a tax distribution of approximately  $2,875,000 was made by the
Company.  In addition the Company distributed the following amounts to Waterford
Group in  accordance  with the terms of the  indenture  relating  to the  8.625%
senior notes (the "8.625% Senior Notes Indenture").


        Date of Distribution            Amount Distributed
        --------------------            ------------------

        September 15, 2003                  $  98,080
        March 15, 2004                      $ 349,247
        September 15, 2004                  $ 249,567
        March 15, 2005                      $ 294,585


1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Accounting Method

The accrual  method of  accounting is used in the  preparation  of the financial
statements.

Cash and Cash Equivalents

Cash  and  cash  equivalents  represent  cash  and  short-term,   highly  liquid
investments with original maturities of three months or less.

Restricted Investments

Restricted  investments  at December  31, 2004 are  principally  comprised of an
investment in a Federal Home Loan Bank Discount  Note,  which was purchased at a
discount  of 1.82%  and  matured  March 2, 2005 and an  investment  in the First
American  Treasury  Obligations  Fund and at December  31, 2003 are  principally
comprised of an investment in a Federal Home Loan Bank Discount Note,  which was
purchased at a discount of 1.01% and matured  March 10, 2004,  and an investment
in the First American  Treasury  Obligations  Fund. The investments  represent a
restricted  investment fund that has been established with a trustee in terms of
the 8.625% Senior Notes Indenture and is reported at cost plus accrued interest,
which approximates market.


                                       F-6
<PAGE>

Trading Cove Associates - Equity Investment

The  Company's  equity  investment  in TCA is accounted for utilizing the equity
method.  Included in the investment is the purchase price of $10,600,000 paid to
a  corporation  for their  12.5%  interest  in TCA.  This  amount was  initially
amortized on a straight-line basis over a 7-year term, which represents the term
of the management  agreement  between TCA and the  Authority.  Then beginning in
March 1999, as a result of the Relinquishment  Agreement,  as defined,  becoming
effective the remaining  balance is being  amortized  over 189 months  beginning
April 1999.

The Company  receives  distributions  from TCA in accordance with an Amended and
Restated Omnibus  Termination  Agreement.  The amount of distributions  received
relies on the fees earned by TCA pursuant to its  Relinquishment  Agreement with
the Authority. Distributions are recorded when received.

Deferred Financing Costs

All costs  incurred  with the issuance of the  Company's  and  Finance's  8.625%
Senior Notes,  were capitalized and are amortized on a straight-line  basis over
the term of the 8.625% Senior Notes.  Additional  amortization  is recorded when
the 8.625% Senior Notes are redeemed. The additional  amortization is the amount
that the redeemed 8.625% Senior Notes represents of the total deferred financing
costs net of accumulated amortization.

Fixed Assets

Fixed Assets are stated at cost. Depreciation is charged against income over the
estimated  life of the  fixed  assets.  The  estimated  life is five  years  for
furniture and fixtures and leasehold improvements.

Income Taxes

The Company,  as a wholly owned  subsidiary  of Waterford  Group,  does not file
federal or state income tax returns.  As a result,  no provision for federal and
state income taxes has been made in the accompanying financial statements.

Concentration of Credit Risk

The Company's  interest in TCA is its  principal  asset and source of income and
cash flow. The Company anticipates regular distributions from TCA based upon the
operating  results of the Authority  and payments of the related  Relinquishment
Fees, as defined, by the Authority.

Financial instruments,  which potentially subject the Company to a concentration
of  credit  risk,  principally  consist  of  cash  in  excess  of the  financial
institutions'  insurance  limits.  The Company invests  available cash with high
credit quality institutions.

Fair Value of Financial Instruments

Fair value of the Company's debt is based on quoted market prices.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  in the United States of America  requires  management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements,  as well as the  reported  amounts of  revenues  and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.


2. TRADING COVE ASSOCIATES:

TCA was organized on July 23, 1993. The primary purpose of TCA has been,

     a)   to assist the Mohegan  Tribe of Indians of  Connecticut  (the "Tribe")
          and the Authority, in obtaining federal recognition,

     b)   to negotiate the tribal-state compact with the State of Connecticut on
          behalf of the Tribe,

     c)   to obtain  financing  for the initial  development  of the Mohegan Sun
          Casino (the "Mohegan Sun"),

     d)   to  negotiate  the Amended and  Restated  Gaming  Facility  Management
          Agreement (the "Management Agreement"),

     e)   to oversee all  operations of the Mohegan Sun pursuant to the terms of
          the Management Agreement until midnight December 31, 1999, and

     f)   to participate in the design and development of the Mohegan Sun.


                                       F-7

<PAGE>

The Mohegan Sun commenced  operations  on October 12, 1996.  From the opening of
Mohegan Sun until  January 1, 2000,  TCA oversaw  the Mohegan  Sun's  day-to-day
operations.

TCA's Partnership Agreement (the "TCA Partnership  Agreement") will terminate on
December 31, 2040, or earlier,  in accordance with its terms.  The Company has a
50 percent  partnership  interest in TCA. The  remaining 50 percent  interest is
owned by Kerzner Investments Connecticut, Inc. ("Kerzner Investments"), formerly
Sun Cove  Limited,  an  affiliate  of Kerzner  International  Limited  ("Kerzner
International").

As of December 31, 2004, 2003 and 2002 the following summary information relates
to TCA. Total revenues and net income are for the years ended December 31, 2004,
2003 and 2002.


<TABLE>
<CAPTION>

<S>                                          <C>                   <C>               <C>
                                                  2004                    2003             2002
                                              -------------          -------------    -------------
Total current assets                          $  27,322,651          $  26,143,405    $  24,501,961
                                              =============          =============    =============

Total assets                                  $  29,539,425          $  28,582,603    $  27,166,723
Total liabilities                                  (973,228)            (1,070,719)     (10,521,195)
                                              -------------          -------------    -------------
Partners' capital                             $  28,566,197          $  27,511,884    $  16,645,528
                                              =============          =============    =============

Total revenues                                 $ 69,144,891          $  69,797,608     $ 59,065,491
                                              =============          =============    =============

Net income                                    $  66,887,319          $  62,919,777    $  55,082,815
                                              =============          =============    =============
</TABLE>

As of December 31, 2004,  2003 and 2002, the following  summarizes the Company's
investment in TCA.

<TABLE>
<CAPTION>

<S>                                           <C>                   <C>               <C>
                                                  2004                   2003              2002
                                               ------------          -----------       ------------
  Trading Cove Associates -
    equity investment, beginning of year       $ 16,965,487          $ 11,972,338      $ 10,639,562
  Contributions                                         ---               450,000         1,000,000
  Distributions                                 (30,416,503)          (23,976,711)      (24,268,604)
                                               ------------          ------------      ------------

                                                (13,451,016)          (11,554,373)      (12,629,042)
                                               ------------          ------------      ------------
Income from Trading Cove
  Associates                                     30,943,659            28,959,888        25,041,408
Amortization of interests
  purchased                                        (440,028)             (440,028)         (440,028)
                                               ------------          ------------      ------------
Equity in income of
  Trading Cove Associates                        30,503,631            28,519,860        24,601,380
                                               ------------          -----------       ------------
Trading Cove Associates -
   equity investment, end of year              $ 17,052,615          $ 16,965,487      $ 11,972,338
                                               ============          ============      ============

</TABLE>

                                       F-8


<PAGE>



TRADING COVE ASSOCIATES - MATERIAL AGREEMENTS


RELINQUISHMENT AGREEMENT

On February  7, 1998,  TCA and the  Authority  entered  into the  Relinquishment
Agreement   (the   "Relinquishment   Agreement").   Under   the   terms  of  the
Relinquishment  Agreement,  TCA  continued  to manage the  Mohegan Sun under the
Management  Agreement until midnight  December 31, 1999, and on January 1, 2000,
the Management Agreement terminated and the Tribe assumed day-to-day  management
of the Mohegan Sun.

Under the Relinquishment Agreement, to compensate TCA for terminating its rights
under the Management Agreement and the Hotel/Resort  Management  Agreement,  the
Authority  agreed  to pay to TCA a fee (the  "Relinquishment  Fees")  equal to 5
percent of Revenues,  as defined in the Relinquishment  Agreement,  generated by
the  Mohegan  Sun  during  the  15-year  period  commencing  on January 1, 2000,
including  revenue  generated  by the Project  Sunburst  expansion  project (the
"Project Sunburst expansion").

The  Relinquishment  Fees are divided  into senior  relinquishment  payments and
junior relinquishment  payments, each of which equals 2.5 percent of "Revenues".
Revenues are defined in the  Relinquishment  Agreement as gross gaming  revenues
(other  than Class II gaming  revenue)  and all other  facility  revenues.  Such
revenue  includes hotel  revenues,  food and beverage sales,  parking  revenues,
ticket revenues and other fees or receipts from the convention/events  center in
the Project  Sunburst  expansion and all rental or other  receipts from lessees,
licensees  and  concessionaires  operating  in the  facility,  but not the gross
receipts of such lessees,  licensees and concessionaires.  Such revenues exclude
revenues generated by any other expansion of the Mohegan Sun.

Senior  relinquishment  payments are payable quarterly in arrears  commencing on
April  25,  2000  for  the  quarter  ended  March  31,  2000,   and  the  junior
relinquishment  payments are payable semi-annually in arrears commencing on July
25, 2000 for the six months ended June 30, 2000,  assuming  sufficient funds are
available after satisfaction of the Authority's senior  obligations,  as defined
in the Relinquishment Agreement.

For the years ended  December 31, 2004,  2003 and 2002 the  Relinquishment  Fees
earned were $69,101,491,  $65,099,553 and $58,508,703,  respectively. The amount
of  Relinquishment  Fees reported are based upon Revenues reported to TCA by the
Authority.

DEVELOPMENT AGREEMENT AND OTHER RELATED AGREEMENTS

On February 7, 1998, TCA and the Authority entered into the Development Services
Agreement (the "Development Agreement").  Pursuant to the Development Agreement,
TCA  agreed to oversee  the  design,  construction,  furnishing,  equipping  and
staffing of the Project Sunburst  expansion for a $14.0 million  development fee
(the "Development Fee").

The first phase of the Project Sunburst  expansion,  including the Casino of the
Sky, The Shops at Mohegan Sun, and the  10,000-seat  Mohegan Sun Arena opened in
September 2001. In April 2002, 734 of the approximately 1,200-hotel rooms in the
34-story  luxury  hotel as well as the  meeting  and  convention  space  and spa
opened.  The balance of the  approximately  1,200-hotel rooms opened during June
2002. At December 31, 2004 the Project Sunburst  expansion was complete in terms
of the Development Agreement.

Pursuant  to  the  Development  Agreement,  the  Authority  agreed  to  pay  the
Development  Fee to TCA  quarterly  beginning  on  January  15,  2000,  based on
incremental  completion  of the Project  Sunburst  expansion  as of each payment
date.  As of December  31, 2004,  the  Authority  had paid TCA $14.0  million as
Development  Fee  payments  in  accordance  with the  terms  of the  Development
Agreement.

On February 9, 1998, TCA and Kerzner  International  Management Limited ("KIML),
an affiliate of Kerzner  Investments,  entered  into the  Agreement  Relating to
Development  Services (the "Development  Services Agreement Phase II"). Pursuant
to the Development Services Agreement Phase II, TCA subcontracted with KIML, who
agreed  to  perform,  those  services  assigned  to  KIML by TCA,  in  order  to
facilitate  TCA's  fulfillment  of its duties and  obligations  to the Authority
under  the  Development  Agreement.   KIML  assigned  the  Development  Services
Agreement Phase II to Kerzner Investments.

                                       F-9


<PAGE>

Pursuant to the  Development  Services  Agreement  Phase II, TCA pays to Kerzner
Investments a fee, as subcontractor  (the "Development  Services Fee Phase II"),
equal to 3 percent of the development  costs of the Project Sunburst  expansion,
excluding  capitalized  interest,  less all costs  incurred by TCA in connection
with the Project  Sunburst  expansion.  At December 31, 2004, all of TCA's costs
associated  with the  Project  Sunburst  expansion  had not been  paid,  however
reasonable  estimates of those costs have been  provided for in TCA's  financial
statements at December 31, 2004. The  Development  Services Fee Phase II is paid
on December 31, 1999,  December 31, 2000 and on the Completion  Date, as defined
in the  Development  Agreement with the final payment being made when the actual
development  costs of the Project  Sunburst  expansion  are known.  TCA pays the
Development  Services  Fee  Phase  II from  available  cash  flow,  if  any,  in
accordance with an Amended and Restated Omnibus Termination Agreement. The total
of the  Development  Services  Fee  Phase  II and  TCA's  costs  related  to the
development of the Project  Sunburst  expansion will exceed the related  revenue
received by TCA under the Development Agreement by approximately $15,964,000. At
December 31, 2004, the accrued liability to Kerzner Investments  pursuant to the
Development Agreement Phase II was approximately $414,000.

Before KIML  assigned the  Development  Services  Agreement  Phase II to Kerzner
Investments,  it entered into the Local  Construction  Services  Agreement  (the
"Local  Construction  Services  Agreement")  with  Wolman  Construction,  L.L.C.
("Construction"),  pursuant to which  Construction  agreed to provide certain of
those  services  assigned to KIML by TCA  pursuant to the  Development  Services
Agreement Phase II. KIML assigned the Local  Construction  Services Agreement to
Kerzner  Investments.  Pursuant to the Local  Construction  Services  Agreement,
Kerzner  Investments  agreed to pay to Construction a fee equal to 20.83 percent
of the  Development  Services  Fee  Phase  II as and  when  Kerzner  Investments
receives payment from TCA in accordance with the Development  Services Agreement
Phase II. Pursuant to a Letter Agreement,  Construction has  subcontracted  with
The Slavik  Company to provide  certain  services  under the Local  Construction
Services Agreement. In exchange for providing such services, Construction agreed
that The Slavik  Company  would be paid a fee equal to 14.30  percent of its fee
under the Local Construction Services Agreement.

MANAGEMENT AGREEMENT

On August 30,  1995 TCA and the Tribe  entered  into the  Management  Agreement.
After  entering  into the  Management  Agreement,  the Tribe  assigned it to the
Authority.

Until midnight  December 31, 1999, TCA was the exclusive  manager of the Mohegan
Sun and earned a management  fee from the Authority  pursuant to the  Management
Agreement (the  "Management  Fees").  The Management Fees were paid monthly (the
final  payment was  received by TCA from the  Authority on January 25, 2000) and
were calculated in three tiers based upon net revenues of the Mohegan Sun.

AMENDED AND RESTATED OMNIBUS TERMINATION AGREEMENT

Effective March 18, 1999, the Amended and Restated Omnibus Termination Agreement
(the " Amended and Restated Omnibus Termination  Agreement") was entered into by
TCA, Kerzner International,  the Company, KIML, LMW, Kerzner Investments, Slavik
and  Construction.  The Amended and Restated Omnibus  Termination  Agreement (i)
terminated  the  memorandum of  understanding  dated  February 7, 1998; and (ii)
effective  January  1, 2000  terminated  a) the  Amended  and  Restated  Omnibus
Financing  Agreement,  b)the  completion  guarantee and  investment  banking and
financing arrangement fee agreement (the "Financing Arrangement Agreement");  c)
the Management  Services  Agreement;  d) the  Organizational  and Administrative
Services  Agreement;  e) the  Marketing  Services  Agreement;  and  f) a  Letter
Agreement relating to expenses dated October 19, 1996.

In consideration  for the termination of such agreements,  TCA agreed to use its
cash to pay the following obligations in the priority set forth below:

     (a)  First, to pay all unpaid amounts which may be due under the terminated
          Letter  Agreement and to pay certain  affiliates of the Company and to
          Kerzner Investments a percentage of an annual fee of $2.0 million less
          the actual expenses  incurred by TCA during such year. Such annual fee
          is payable in equal  quarterly  installments  beginning March 31, 2000
          and ending  December 31, 2014.  For the years ended December 31, 2004,
          and 2003,  $1,869,157 ($934,579 to Kerzner Investments and $934,578 to
          affiliates of the Company)and  $1,840,346 ($920,173 to each of Kerzner
          Investments  and  affiliates of the Company),  respectively,  had been
          incurred by TCA in terms of the first priority.

     (b)  Second,  to return all capital  contributions  made by the partners of
          TCA after  September  29, 1995.  The Company does not  anticipate  TCA
          making  further  capital  calls  to  fund  expenses   related  to  the
          development of the Project Sunburst expansion. From January 1, 2000 to
          December 31, 2004 these capital contributions  aggregated  $8,000,000.
          From January 1, 2000 to December 31, 2004  $8,000,000  has been repaid
          to the  partners  of TCA,  50 percent to the Company and 50 percent to
          Kerzner Investments.

          As  of  December  31,  2004,  $0  in  capital  contributions  remained
          outstanding.
                                      F-10

<PAGE>

     (c)  Third, to pay any accrued  amounts for obligations  performed prior to
          January 1, 2000 under the Financing  Arrangement  Agreement.  All such
          required payments were made during 2000.

     (d)  Fourth,  to make the payments set forth in the agreements  relating to
          the Development Services Agreement Phase II and the Local Construction
          Services  Agreement.  No such payments are required or due at December
          31, 2004. The accrued liability to Kerzner Investments with respect to
          such fee at December 31, 2004 was approximately $414,000.

     (e)  Fifth,  to pay  Kerzner  Investments  an annual  fee (in the form of a
          priority  distribution)  of $5.0  million  payable in equal  quarterly
          installments  of $1.25  million  beginning  March 31,  2000 and ending
          December  31,  2006.  On January  26,  2005 and on January  27,  2004,
          $1,250,000 was distributed in terms of the fifth priority.

     (f)  Sixth,  to pay any accrued  amounts  for  obligations  performed  with
          respect  to periods  prior to  January  1, 2000  under the  Management
          Services  Agreement,  the Organizational  and Administrative  Services
          Agreement and the Marketing  Services  Agreement.  The final  required
          payments under this priority were made during 2001.

     (g)  Seventh,  for the period  beginning March 31, 2000 and ending December
          31,  2014,  to  pay  each  of  Kerzner  Investments  and  the  Company
          twenty-five   percent   (25%)  of  the   relinquishment   payments  as
          distributions.  On January 26, 2005 and January 27, 2004,  $13,294,808
          ($6,647,404  to  each  of  Kerzner  Investments  and  the  Company)and
          $12,669,636  ($6,334,818  to  each  of  Kerzner  Investments  and  the
          Company), respectively, was distributed by TCA in terms of the seventh
          priority.

     (h)  Eighth,  to  distribute  all excess  cash.  On January 26,  2005,  and
          January  27,  2004,   $11,600,000   ($5,800,000  to  each  of  Kerzner
          Investments  and the  Company)and  $10,926,597  ($5,463,298 to Kerzner
          Investments  and  $5,463,299  to  the  Company),   respectively,   was
          distributed as excess cash.

In addition,  TCA shall not make any  distributions  pursuant to the Amended and
Restated Omnibus Termination  Agreement until it has annually distributed to its
partners  pro rata,  the amounts  related to its  partners  tax  obligations  as
described in Section  3.03a(1) of the TCA  Partnership  Agreement less twice the
amount of all other funds paid or  distributed  to the Company  during such year
pursuant to the Amended and Restated Omnibus Termination Agreement.

To the extent TCA does not have adequate  cash to make the payments  pursuant to
the Amended and Restated Omnibus Termination Agreement, such amount due shall be
deferred  without the accrual of interest until TCA has  sufficient  cash to pay
them.

AMENDED AND RESTATED OMNIBUS FINANCING AGREEMENT

Until January 1, 2000 TCA's primary source of revenue was Management Fees. Those
fees  were  utilized  by  TCA to  make  subcontract  payments  to  partners  and
affiliates  pursuant to the Amended and  Restated  Omnibus  Financing  Agreement
which was terminated effective January 1, 2000.


3. BENEFICIAL INTEREST - LEISURE RESORT TECHNOLOGY, INC.:

On January 6, 1998,  pursuant to the settlement and release agreement  described
in Note 7 below, the Company paid $5,000,000 to Leisure Resort Technology,  Inc.
("Leisure") and, among other things, Leisure gave up (a) its beneficial interest
of 5 percent in certain fees and excess cash flows,  as defined,  of TCA and (b)
any other claims it may have had against the Company, TCA and TCA's partners and
former partner.

On August 6, 1997,  Leisure,  a former partner of TCA,  filed a lawsuit  against
TCA, Kerzner  Investments,  RJH Development Corp. (a former partner of TCA), the
Company and its owners, claiming breach of contract,  breach of fiduciary duties
and other matters in connection  with the development of the Mohegan Sun by TCA.
In connection with the settlement of all matters related to such suit,  pursuant
to a settlement and release  agreement,  the Company agreed to acquire Leisure's
interests  in TCA.  As a result of this  acquisition,  Leisure no longer has the
right to 5 percent of the Organizational  and Administrative  fee, as defined in
the Organizational and Administrative Services Agreement, and 5 percent of TCA's
Excess Cash as defined in the TCA Partnership Agreement,  and the Company is now
entitled to such fees and such cash.

On March 17, 1999, the $65 Million  Senior Notes were retired,  and on March 18,
1999,  the Company  paid an  additional  $2,000,000  to Leisure  pursuant to the
settlement and release agreement.  On January 7, 2000, Leisure filed a complaint
against the Company and certain other defendants  relating to the settlement and
release  agreement.  For a  description  of the  complaint,  see Note 7 to these
financial statements.

Until March 17, 1999,  the payments made to Leisure  pursuant to the  settlement
and release  agreement and associated  costs were  amortized on a  straight-line
basis over the remaining  term of the Management  Agreement.  As a result of the
Relinquishment  Agreement  becoming  effective,  the  remaining  balance will be
amortized over 189 months beginning March 18, 1999. Accumulated  amortization at
December 31, 2004 and 2003, amounts to $3,273,152 and $2,895,162 respectively.

                                      F-11
<PAGE>

4. DEFERRED COSTS:

   Deferred costs consist of the following at December 31, 2004:

        Deferred financing costs                        $3,843,031
        Less accumulated amortization                      939,890
                                                        ----------
                                                        $2,903,141
                                                        ==========

Amortization  of deferred  financing  cost  totaling  $664,918,  $2,918,310  and
$366,864  were expensed for the years ending  December 31, 2004,  2003 and 2002,
respectively.

The Company's  estimate of amortization  expense for each of the succeeding five
years and thereafter is as follows:

                     Year ending December 31,

                          2005                          $  376,562
                          2006                             376,562
                          2007                             376,562
                          2008                             377,593
                          2009                             376,562
                          Thereafter                     1,019,300
                                                        ----------
                                                        $2,903,141
                                                        ==========

                                      F-12

<PAGE>

5. $155 MILLION 8.625% SENIOR NOTES PAYABLE:

On June 11,  2003,  the  Company  and Finance  issued the 8.625%  Senior  Notes.
Payment of the  principal  of, and interest on, the 8.625%  Senior Notes is pari
passu in right of payment with all of the Company's  and Finance's  senior debt,
and  effectively  subordinate  in right of payment to all of the  Company's  and
Finance's existing and future collateralized and subordinated debts.

The 8.625%  Senior  Notes bear  interest at a rate of 8.625% per annum,  payable
semi-annually  in  arrears  on  March  15th  and  September  15th of each  year,
commencing  September 15, 2003.  The  principal  amount due on the 8.625% Senior
Notes is payable on September 15, 2012.

The  Company  and  Finance  may elect to redeem all or any of the 8.625%  Senior
Notes at any time on or after September 15, 2008 at a redemption  price equal to
a  percentage  of the  principal  amount of notes being  redeemed  plus  accrued
interest. Such percentage is set forth in the following table:

<TABLE>
        <S>                                                     <C>
        If notes are redeemed                                   Percentage
        ---------------------                                   ----------

        after September 14, 2008 but
        on or before September 14, 2009                          103.551%
        after September 14, 2009 but
        on or before September 14, 2010                          102.537%
        after September 14, 2010
        but on or before September 14, 2011                      101.522%
        after September 14, 2011 but
        on or before September 14, 2012                          100.507%
        after September 14, 2012                                 100.000%

</TABLE>


The 8.625% Senior Notes provide that upon the  occurrence of a Change of Control
(as defined in the 8.625% Senior Notes Indenture), the holders thereof will have
the option to require the  redemption of the 8.625% Senior Notes at a redemption
price equal to 101% of the principal amount thereof plus accrued interest.

Pursuant to the terms of the 8.625% Senior Notes  Indenture,  if the Company and
Finance  have any Company  Excess  Cash,  as defined in the 8.625%  Senior Notes
Indenture, on February 1st or August 1st of any year, they must use such Company
Excess Cash less all  Required  IRA True-Up  Payments,  as defined in the 8.625%
Senior Notes Indenture, and less any amount set aside for the payment of accrued
and  unpaid  interest  on the  interest  payment  date that  corresponds  to the
redemption date for which the  determination is being made, to redeem the 8.625%
Senior Notes on the March 15th or September 15th following such dates.  Any such
redemption will be made at a price equal to a percentage of the principal amount
being redeemed. Such percentage is set forth in the following table:




<TABLE>
        <S>                                    <C>
        If notes are redeemed with             Redemption Price (expressed as a percentage
        Company Excess Cash                    of the principal amount being redeemed)
        --------------------------             -------------------------------------------

        after September 14, 2003 but
        on or before September 14, 2004                        108.625%
        after September 14, 2004 but
        on or before September 14, 2005                        107.610%
        after September 14, 2005 but
        on or before September 14, 2006                        106.596%
        after September 14, 2006 but
        on or before September 14, 2007                        105.581%
        after September 14, 2007 but
        on or before September 14, 2008                        104.566%
        after September 14, 2008 but
        on or before September 14, 2009                        103.551%
        after September 14, 2009 but
        on or before September 14, 2010                        102.537%
        after September 14, 2010
        but on or before September 14, 2011                    101.522%
        after September 14, 2011 but
        on or before September 14, 2012                        100.507%
        after September 14, 2012                               100.000%


</TABLE>

                                      F-13

<PAGE>

The Company and Finance have periodically redeemed portions of the 8.625% Senior
Notes with Company  Excess Cash pursuant to the terms of the 8.625% Senior Notes
Indenture. The table below summarizes (a) the amount of Company Excess Cash that
the  Company  and  Finance  have  determined  was  available  for the  mandatory
redemption  of the 8.625%  Senior  Notes on February  1st and August 1st of each
applicable year pursuant to the terms of the 8.625% Senior Notes Indenture,  (b)
the aggregate principal amount of 8.625% Senior Notes redeemed with such Company
Excess Cash, (c) the date on which such redemption was consummated,  and (d) the
redemption price at which such redemption was made.

<TABLE>
<S>                 <C>                        <C>                      <C>                    <C>

Date                Company Excess Cash        Principal Amount of      Dates of Redemption     Price (expressed as percentage of
                    (approximately)            notes redeemed                                   principal amount being redeemed
----------------    -------------------        -------------------      --------------------    ---------------------------------
August 1, 2003        $   5,568,000              $ 1,912,000             September 15, 2003                 108.625%
February 1, 2004      $  14,534,000              $ 7,302,000               March 15, 2004                   108.625%
August 1, 2004        $  11,695,000              $ 5,025,000             September 15, 2004                 107.610%
February 1, 2005      $  12,098,000              $ 5,600,000               March 15, 2005                   107.610%



</TABLE>

In certain  circumstances,  if either the  Company or Kerzner  Investments,  the
Company's  partner  in TCA,  exercises  the  option  to buy or sell  partnership
interests in TCA, the Company and Finance must redeem the 8.625% Senior Notes.

The 8.625% Senior Notes  Indenture  contains  certain  affirmative  and negative
covenants   customarily   contained  in  such  agreements,   including   without
limitation,  covenants  that  restrict,  subject  to  specified  exceptions  the
Company's and Finance's ability to (i) borrow money, (ii) make  distributions on
its equity interests or certain other restricted  payments,  (iii) use assets as
security in other transactions,  (iv) make investments, (v) sell other assets or
merge with other companies,  and (vi) engage in any business except as currently
conducted  or  contemplated  or amend their  relationship  with TCA.  The 8.625%
Senior Notes  Indenture  also provides for  customary  events of default and the
establishment  of a  restricted  investment  account with a trustee for interest
reserves  ("IRA").  The IRA consists of an amount of funds equal to the interest
payment due on the 8.625% Senior Notes on the following  interest  payment date.
The IRA will be released  and the Company can make a permitted  distribution  to
Waterford  Group once the Leverage  Ratio, as defined in the 8.625% Senior Notes
Indenture, is less than or equal to 3.0 to 1.0.

The fair market value of the  Company's  long term debt at December 31, 2004 and
2003  is  estimated  to  be   approximately   $150,614,000   and   $163,804,000,
respectively, based on the quoted market price for the 8.625% Senior Notes.


6. RECONCILIATION OF FINANCIAL STATEMENT AND TAX INFORMATION:

The following is a reconciliation of net income for financial statement purposes
to net income for federal  income tax purposes for the years ended  December 31,
2004, 2003 and 2002.

<TABLE>
<CAPTION>

<S>                           <C>                         <C>                      <C>
                                         2004                        2003                     2002
                                     ------------                -----------             ------------

Financial Statement
 net income                          $ 13,923,694                $ 3,891,633             $ 12,033,310
Financial statement equity in
 (income) loss of Trading Cove Associates over tax basis equity in (income) loss
 of
 Trading Cove Associates                   16,064                 (4,581,809)                 562,075
Other                                      (1,981)                     6,124                    7,263
                                     ------------                -----------             ------------
Federal income tax basis
 net income (loss)                   $ 13,937,777                $  (684,052)            $ 12,602,648
                                     ============                ===========             ============

</TABLE>

                                      F-14


<PAGE>


The following is a reconciliation of member's deficiency for financial statement
purposes to member's  deficiency  for federal income tax purposes as of December
31, 2004, 2003 and 2002.


<TABLE>
<CAPTION>

<S>                                      <C>                    <C>                <C>

                                               2004                    2003              2002
                                          ---------------        ---------------    --------------
Financial statement member's
 deficiency                               $  (109,998,382)       $  (120,906,772)   $  (76,962,084)
Adjustment for cumulative
 difference between tax basis
 of Trading Cove Associates-
 equity investment and GAAP
 basis of Trading Cove
 Associates-equity investment                     757,944                837,129         4,764,291
Current year financial
 statement net income (over)
 under federal income tax
 basis net income (loss)                           14,083             (4,575,685)          569,338
                                          ---------------        ---------------    --------------
Federal income tax basis
 member's deficiency                      $  (109,226,355)       $  (124,645,328)   $  (71,628,455)
                                          ===============        ===============    ==============

</TABLE>



7. COMMITMENTS AND CONTINGENT LIABILITIES:

LEGAL PROCEEDINGS

On January 6, 1998,  Leisure Resort  Technology,  Inc. and defendants  Waterford
Gaming,  L.L.C.,  Trading Cove  Associates,  LMW  Investments,  Inc., and Slavik
Suites, Inc. settled a prior lawsuit brought by Leisure. In connection with this
settlement, Leisure, TCA, the Company, LMW Investments, Inc., and Slavik Suites,
Inc.  entered  into  a  settlement  and  release  agreement.  Pursuant  to  this
settlement  and release  agreement,  the  Company  bought  Leisure's  beneficial
interest in TCA.

By complaint dated January 7, 2000, as amended February 4, 2000, Leisure filed a
four count complaint naming as defendants Waterford Gaming, L.L.C., Trading Cove
Associates, LMW Investments, Inc., Slavik Suites, Inc., Waterford Group, L.L.C.,
Len Wolman and Mark Wolman (collectively, the "Defendants"). The matter has been
transferred  to the complex  litigation  docket and is pending in State Court in
Waterbury,  Connecticut.  The  complaint  alleged  breach of  fiduciary  duties,
fraudulent non-disclosure, violation of Connecticut Statutes Section 42-110a, et
seq. and unjust  enrichment in connection with the negotiation by certain of the
Defendants of the settlement and release agreement. The complaint also brought a
claim for an accounting.  The complaint  seeks  unspecified  legal and equitable
damages.

On  February  29,  2000,  Defendants  filed a Motion to Strike  and a Motion for
Summary Judgment, each with respect to all claims. The Court granted Defendants'
Motion to Strike in part and denied Defendants' Motion for Summary Judgment,  on
October 13, 2000.  The Court's order  dismissed the claim for an accounting  and
the claim under  Connecticut  Statutes Section  42-110a,  et seq. The Court also
struck the alter ego allegations in the complaint against LMW Investments, Inc.,
Slavik Suites,  Inc., Len Wolman and Mark Wolman.  In a decision dated August 6,
2001,  the Court  dismissed all claims  against LMW  Investments,  Inc.,  Slavik
Suites, Inc., Len Wolman and Mark Wolman.

On November 15, 2000, the Company and its co-defendants  answered the complaint.
In addition,  the Company and Trading Cove Associates asserted counterclaims for
breach of the  settlement  and  release  agreement  and  breach  of the  implied
covenant  of good faith  against  Leisure  and its  president,  Lee Tyrol.  In a
decision dated June 6, 2001, the Court dismissed the  counterclaims  against Lee
Tyrol.  Leisure  moved for summary  judgment  seeking  dismissal  of the counter
claims in full, which motion was denied on April 14, 2003.

Fact   discovery  is  completed.   On  April  15,  2004,  the  Company  and  its
co-defendants filed a motion for summary judgment as to all of Leisure's claims.
The Court heard  argument on this Motion on June 23, 2004. In an August 4, 2004,
Memorandum of Decision, the Court granted summary judgment for the Defendants as
to each of the remaining three counts of the plaintiffs complaint. The plaintiff
has appealed this decision.  Defendants'  counterclaims  are stayed pending this
appeal.

The Company believes that it has meritorious defenses and, if necessary, intends
vigorously  to  contest  the claims in this  action and to assert all  available
defenses.  At the present  time,  the Company is unable to express an opinion on
the likelihood of an unfavorable outcome or to give an estimate of the amount or
range of possible loss to the Company as a result of this  litigation due to the
pendency of the appeal and the disputed  issues of law and/or facts on which the
outcome of this litigation depends.


                                      F-15
<PAGE>


8. CERTAIN RELATIONSHIPS and RELATED TRANSACTIONS:

DEVELOPMENT SERVICES AGREEMENT PHASE II AND RELATED AGREEMENTS AND PAYMENTS

On February 9, 1998,  TCA and KIML,  an  affiliate of Kerzner  Investments,  the
Company's partner in TCA, entered into the Development  Services Agreement Phase
II. Pursuant to the Development  Services  Agreement Phase II, TCA subcontracted
with KIML who agreed to perform those services  assigned to KIML by TCA in order
to facilitate  TCA's  fulfillment of its duties and obligations to the Authority
under  the  Development  Agreement.   KIML  assigned  the  Development  Services
Agreement Phase II to Kerzner Investments.

Pursuant to the  Development  Services  Agreement  Phase II, TCA pays to Kerzner
Investments a fee, as subcontractor, equal to 3 percent of the development costs
of the Project Sunburst  expansion,  excluding  capitalized  interest,  less all
costs  incurred by TCA in connection  with the Project  Sunburst  expansion.  At
December  31,  2004,  all of TCA's costs  associated  with the Project  Sunburst
expansion  had not been paid,  however  reasonable  estimates of those cost have
been  provided for in TCA's  financial  statements  at December  31,  2004.  The
Development  Services Fee Phase II is paid in installments on December 31, 1999,
December  31, 2000 and on the  Completion  Date,  as defined in the  Development
Agreement,  with the final payment being made when the actual  development costs
of the Project Sunburst  expansion are known. TCA pays the Development  Services
Fee Phase II from  available  cash flow, if any, in accordance  with the Amended
and Restated Omnibus Termination Agreement.

Before KIML  assigned the  Development  Services  Agreement  Phase II to Kerzner
Investments,  it entered into the Local  Construction  Services  Agreement  with
Construction, an affiliate of the Company, pursuant to which Construction agreed
to provide  certain of those  services  assigned to KIML by TCA  pursuant to the
Development  Services  Agreement Phase II. KIML assigned the Local  Construction
Services  Agreement to Kerzner  Investments.  Pursuant to the Local Construction
Services  Agreement,  Kerzner  Investments  agreed to pay to  Construction a fee
equal to 20.83  percent  of the  Development  Services  Fee Phase II as and when
Kerzner Investments receives payment from TCA in accordance with the Development
Services Agreement Phase II.

Pursuant to a Letter Agreement,  Construction has subcontracted  with The Slavik
Company,  an affiliate of the Company,  to provide  certain  services  under the
Local Construction Services Agreement.  In exchange for providing such services,
Construction  agreed that The Slavik  Company would be paid a fee equal to 14.30
percent of its fee under the Local Construction Services Agreement.

On April 26, 2000,  July 26,  2000,  January 26, 2001 and July 28, 2003 TCA paid
$3,095,000,  $1,238,000,  $6,474,000 and  $9,157,000,  respectively,  as partial
payment  of  the  Development  Services  Fee  Phase  II.  Construction  received
$644,688, $257,875,  $1,348,534 and $1,907,403,  respectively,  and Construction
paid The Slavik  Company  $92,190,  $36,876,  $192,840 and $259,121 on April 26,
2000, July 26, 2000, January 26, 2001 and July 28, 2003, respectively.

At  December  31, 2004 TCA has accrued a  liability  to Kerzner  Investments  of
approximately $414,000, pursuant to the Development Services Agreement Phase II.


EMPLOYMENT AGREEMENT WITH MR. LEN WOLMAN

Len Wolman, the Company's Chairman of the Board of Directors and Chief Executive
Officer,  is the  Company's  designated  representative  to TCA  under  the  TCA
Partnership Agreement.

On September 28, 1998, the Company entered into an employment agreement with Len
Wolman.  The employment  agreement provides for a base annual salary of $250,000
reduced by any amounts Mr. Wolman receives as a salary from TCA for such period.
In addition,  pursuant to the employment agreement, the Company agreed to pay to
Mr.  Wolman an amount  equal to 0.05  percent of the revenues of the Mohegan Sun
including  the  Project  Sunburst  expansion  to the extent  Mr.  Wolman has not
received such amounts from TCA. On and after January 1, 2004, the Company agreed
to pay to Mr. Wolman incentive compensation based on the revenues of the Mohegan
Sun,  including the Project Sunburst  expansion,  as a percentage  (ranging from
0.00 percent to 0.10 percent) to be determined  using a formula  attached to the
employment  agreement which compares actual  revenues to  predetermined  revenue
targets.  For the years  ended  December  31,  2004,  2003 and 2002 the  Company
incurred,$1,217,420, $900,998 and $835,086, respectively, as an expense pursuant
to Len Wolman's employment agreement.


                                      F-16


<PAGE>

OTHER RELATED PARTY TRANSACTIONS

For the years ended  December 31, 2004,  2003 and 2002,  approximately  $42,000,
$42,000 and $46,000, respectively, was incurred to the principals and affiliates
of the Company as part of TCA's  operating  expenses.  In addition in 2004, 2003
and 2002 TCA incurred approximately $935,000, $920,000 and $0, respectively,  to
the principals of the Company in connection with the first priority payments set
forth under the section "Trading Cove Associates  Material  Agreements - Amended
and Restated Omnibus Termination Agreement".

In 1999, the Company  renovated Len Wolman's  office space at a cost of $32,413,
of which  $30,000 was paid to Wolman  Homes Inc.,  an  affiliate of the Company.
Cost of the improvement is being  depreciated  over five years.  Expense for the
years  ended  December  31,  2004,  2003 and 2002 was $553,  $6,480 and  $6,480,
respectively.

Waterford  Group,  Slavik and the other  principals of the Company and Waterford
Group have  interests  in and may acquire  interests  in hotels in  southeastern
Connecticut  which have or may have arrangements with the Mohegan Sun to reserve
and provide hotel rooms to patrons of the Mohegan Sun.


                                      F-17

<PAGE>


             Report of Independent Registered Public Accounting Firm



To the Partners of Trading Cove Associates



In our opinion,  the accompanying  balance sheets and the related  statements of
operations,  changes in partners'  capital and of cash flows present fairly,  in
all material  respects,  the financial  position of Trading Cove Associates (the
"Partnership")  at December 31, 2004 and 2003, and the results of its operations
and its cash flows for each of the three years in the period ended  December 31,
2004, in conformity with accounting  principles generally accepted in the United
States of America.  These  financial  statements are the  responsibility  of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial  statements  based on our  audits.  We  conducted  our audits of these
statements in accordance  with the  standards of the Public  Company  Accounting
Oversight  Board  (United  States).  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.





PricewaterhouseCoopers, LLP
Hartford, CT
March 15, 2005


                                      F-18


<PAGE>

                             Trading Cove Associates
                                 Balance Sheets
                           December 31, 2004 and 2003
                           --------------------------
<TABLE>
<S>                                                           <C>                    <C>
                                                                   2004                    2003
                                                                   ----                    ----
Assets
Current assets
     Cash and cash equivalents                                 $    732,886           $    798,602
     Relinquishment fee receivable                               26,589,614             25,339,272
     Other current assets                                               151                  5,531
                                                               ------------           ------------

        Total current assets                                     27,322,651             26,143,405
                                                               ------------           ------------

Deferred costs, net of accumulated amortization
     of $3,282,551 and $3,060,427 at December 31, 2004
     and 2003, respectively                                       2,216,390              2,438,514
Property and equipment, net of accumulated depreciation
     of $14,951 and $14,651 at December 31, 2004
     and 2003, respectively                                             384                    684
                                                               ------------           ------------

        Total assets                                           $ 29,539,425           $ 28,582,603
                                                               ============           ============


Liabilities and Partners' Capital
Current liabilities
     Accounts payable and accrued expenses                     $     93,538           $     88,972
     Subcontracted services payable                                 465,930                474,767
     Estimated contract costs due related
        party                                                       413,760                506,980
                                                               ------------             ----------

        Total current liabilities                                   973,228              1,070,719
                                                               ------------           ------------

Commitments and contingent liabilities

Partners' capital                                                28,566,197             27,511,884
                                                               ------------           ------------

        Total liabilities and partners' capital                $ 29,539,425           $ 28,582,603
                                                               ============           ============


</TABLE>

The accompanying notes are an integral part of these financial statements.


                                      F-19



<PAGE>

                             Trading Cove Associates
                            Statements of Operations
              For the Years Ended December 31, 2004, 2003 and 2002
              ----------------------------------------------------

<TABLE>
<S>                                                           <C>              <C>             <C>
                                                                   2004             2003            2002
                                                                   ----             ----            ----

Revenue
      Relinquishment fee                                       $ 69,101,491     $ 65,099,553    $ 58,508,703
      Development services revenue                                   43,400        4,698,055         556,788
                                                               ------------     ------------    ------------

              Total revenues                                     69,144,891       69,797,608      59,065,491
                                                               ------------     ------------    ------------


Expenses
      Subcontract payments to partners and
        their affiliates                                          1,869,157        1,840,346             ---
      Cost of development services revenue                           43,400        4,662,055       1,756,788
      Amortization and depreciation                                 222,424          221,818         221,818
      General and administrative                                    130,843          159,653       2,017,350
                                                               ------------     ------------    ------------

              Total expenses                                      2,265,824        6,883,872       3,995,956
                                                               ------------     ------------    ------------

      Interest and dividend income                                    8,252            6,041          13,280
                                                               ------------     ------------    ------------

              Net income                                       $ 66,887,319     $ 62,919,777    $ 55,082,815
                                                               ============     ============    ============


</TABLE>

The accompanying notes are an integral part of these financial statements.

                                      F-20


<PAGE>

                             Trading Cove Associates
                   Statements  of Changes  in  Partners'  Capital  For the Years
              Ended December 31, 2004, 2003 and 2002
              ----------------------------------------------------
<TABLE>
<S>                                                           <C>                     <C>               <C>

                                                               Kerzner Investments       Waterford
                                                                 Connecticut Inc.      Gaming, L.L.C.        Total
                                                               -------------------     --------------        -----

Partners' capital, January 1, 2002                                $  7,174,961          $  5,924,961     $ 13,099,922

Net income                                                          30,041,407            25,041,408       55,082,815

Contributions                                                        1,000,000             1,000,000        2,000,000

Distributions                                                      (29,268,604)          (24,268,605)     (53,537,209)
                                                                  ------------          ------------     ------------

Partners' capital, December 31, 2002                                 8,947,764             7,697,764       16,645,528

Net income                                                          33,959,889            28,959,888       62,919,777

Contributions                                                          450,000               450,000          900,000

Distributions                                                      (28,976,711)          (23,976,710)     (52,953,421)
                                                                  ------------          ------------     ------------

Partners' capital, December 31, 2003                                14,380,942            13,130,942       27,511,884

Net income                                                          35,943,660            30,943,659       66,887,319

Distributions                                                      (35,416,503)          (30,416,503)     (65,833,006)
                                                                  ------------          ------------     ------------

Partners' capital, December 31, 2004                              $ 14,908,099          $ 13,658,098     $ 28,566,197
                                                                  ============          ============     ============

</TABLE>

The accompanying notes are an integral part of these financial statements.

                                      F-21


<PAGE>

                             Trading Cove Associates
                            Statements of Cash Flows
              For the Years Ended December 31, 2004, 2003 and 2002
              ----------------------------------------------------

<TABLE>
<S>                                                               <C>                     <C>                <C>

                                                                       2004                    2003               2002
                                                                       ----                    ----               ----


Cash flows from operating activities
    Net income                                                     $ 66,887,319            $  62,919,777      $ 55,082,815
                                                                   ------------            -------------      ------------

    Adjustments to reconcile net income
       to net cash provided by operating activities
         Amortization                                                   222,124                  221,518           221,518
         Depreciation                                                       300                    3,303             7,641
         Loss on disposal of property and equipment                         ---                      743               ---
         Gain on sale of property and equipment                             ---                   (1,750)              ---
         Change in operating assets and liabilities
            Relinquishment fee receivable                            (1,250,342)              (1,669,449)       (4,983,247)
            Development fee receivable                                      ---                   84,000         1,176,000
            Other current assets                                          5,380                   (1,531)           (4,000)
            Accounts payable and accrued expenses                         4,566                  (25,884)          (64,237)
            Subcontracted services payable                               (8,837)                 474,767          (430,791)
            Estimated contract costs due related party                  (93,220)              (9,899,359)          593,578
                                                                   ------------            -------------      ------------
                   Total adjustments                                 (1,120,029)             (10,813,642)       (3,483,538)
                                                                   ------------            -------------      ------------

                   Net cash provided by operating activities         65,767,290               52,106,135        51,599,277
                                                                   ------------            -------------      ------------

Cash flows from investing activities
    Proceeds from sale of property and equipment                            ---                    1,750               ---
                                                                   ------------            -------------      ------------
                   Net cash provided by investing activities                ---                    1,750               ---
                                                                   ------------            -------------      ------------

Cash flows from financing activities
    Distributions                                                   (65,833,006)             (52,953,421)      (53,537,209)
    Partners' contributions                                                 ---                  900,000         2,000,000
                                                                   ------------            -------------      ------------
                   Net cash used in financing activities            (65,833,006)             (52,053,421)      (51,537,209)
                                                                   ------------            -------------      ------------

                   Net change in cash and cash equivalents              (65,716)                  54,464            62,068

Cash and cash equivalents

Beginning of year                                                       798,602                  744,138           682,070
                                                                   ------------            -------------      ------------
End of year                                                        $    732,886            $     798,602      $    744,138
                                                                   ============            =============      ============


</TABLE>

The accompanying notes are an integral part of these financial statements.

                                      F-22




<PAGE>

                             TRADING COVE ASSOCIATES

                          NOTES TO FINANCIAL STATEMENTS

1. Organization, Partnership Agreement and Other Material Agreements

      (a) Organization and Partnership Agreement

          Trading Cove Associates  (the  "Partnership"),  a Connecticut  general
          partnership,  was organized on July 23, 1993.  The primary  purpose of
          the Partnership has been:

          (i)  to assist  the  Mohegan  Tribe of  Indians  of  Connecticut  (the
               "Tribe")   and  the  Mohegan   Tribal   Gaming   Authority   (the
               "Authority") in obtaining federal recognition;

          (ii) to  negotiate  the   tribal-state   compact  with  the  State  of
               Connecticut on behalf of the Tribe;

          (iii)to obtain  financing for the initial  development  of the Mohegan
               Sun Casino (the "Mohegan Sun");

          (iv) to negotiate the Amended and Restated Gaming Facility  Management
               Agreement, (the "Management Agreement");

          (v)  to oversee all  operations  of the  Mohegan  Sun  pursuant to the
               terms of the Management  Agreement  until  midnight  December 31,
               1999, and

          (vi) to participate in the design and development of the Mohegan Sun.

               The Mohegan Sun commenced  operations  on October 12, 1996.  From
               the opening of the Mohegan  Sun, and until  January 1, 2000,  the
               Partnership oversaw the Mohegan Sun's day-to-day operations.

               The Partnership  will terminate on December 31, 2040, or earlier,
               in accordance  with the terms of the  partnership  agreement (the
               "Partnership Agreement").

               The original  partners of the  Partnership  were RJH  Development
               Corp. ("RJH"), a New York corporation, Leisure Resort Technology,
               Inc. ("Leisure"), a Connecticut corporation,  Slavik Suites, Inc.
               ("Slavik"),  a Michigan  corporation,  and LMW Investments,  Inc.
               ("LMW"),  a Connecticut  corporation.  On September 21, 1994, the
               Partnership  Agreement  was amended and restated to admit Kerzner
               Investments   Connecticut,   Inc.  ("Kerzner   Investments"),   a
               Connecticut corporation, formerly Sun Cove Limited, as a partner.

               On February 3, 1995, Leisure entered into an acknowledgement  and
               release agreement to withdraw as a partner of the Partnership and
               hold its interest in the Partnership as a beneficial interest. On
               August 6, 1997,  Leisure filed a lawsuit against the Partnership,
               Kerzner Investments,  RJH and Waterford Gaming L.L.C. ("Waterford
               Gaming") and its owners,  claiming breach of contract,  breach of
               fiduciary  duties  and  other  matters  in  connection  with  the
               development  of the Mohegan Sun. On January 6, 1998,  pursuant to
               the settlement and release  agreement  described in Note 6 below,
               Waterford  Gaming paid  $5,000,000  to Leisure  and,  among other
               things,  Leisure  gave up, (a) its  beneficial  interest of 5% of
               certain  fees  and  excess  cash  flows,   as  defined,   of  the
               Partnership  and (b) any other claims it may have had against the
               Partnership,  Kerzner Investments,  RJH, Waterford Gaming and its
               owners.  In connection with the settlement of all matters related
               to such suit,  pursuant to the settlement and release  agreement,
               Waterford  Gaming  agreed to acquire  Leisure's  interests in the
               Partnership.  As a result of this acquisition,  Leisure no longer
               has the right to 5% of the Organizational and Administrative fee,
               as  defined in the  Organizational  and  Administrative  Services
               Agreement,  and 5% of the Partnership's Excess Cash as defined in
               the Partnership  Agreement,  and Waterford Gaming is now entitled
               to such fees and cash.  During  March  1999,  Waterford  Gaming's
               $65,000,000  senior  notes were  retired  and, on March 18, 1999,
               Waterford  Gaming  paid  an  additional   $2,000,000  to  Leisure
               pursuant to the settlement and release  agreement.  On January 7,
               2000,  Leisure  filed a  complaint  against the  Partnership  and
               certain other defendants.

                                      F-23


<PAGE>

               For a description of the complaint, see Note 6 to these financial
               statements.

               On  November  8,  1996,  Slavik,  LMW and RJH  withdrew  from the
               Partnership  and,  concurrently,  consented  to the  admission of
               Waterford   Gaming   to  the   Partnership.   Waterford   Gaming,
               simultaneously,  purchased  RJH's  interest  in the  Partnership.
               Waterford  Gaming is owned by  Waterford  Group,  LLC.  Waterford
               Group, LLC is owned by Slavik and LMW.

               The  partners'  percentage  interest  in  the  Partnership  as of
               November 8, 1996 was as follows:

                                                          Percentage
          Partner                                          Interest
          -------                                         ----------
          Kerzner Investments Connecticut, Inc.              50.0%
          Waterford Gaming, L.L.C.                           50.0%


      (b) Other Material Agreements

               Relinquishment Agreement

               On February 7, 1998, the  Partnership  and the Authority  entered
               into   the   Relinquishment    Agreement   (the   "Relinquishment
               Agreement").  Under the terms of the Relinquishment Agreement the
               Partnership  continued  to  manage  the  Mohegan  Sun  under  the
               Management  Agreement  until  midnight  December 31, 1999, and on
               January 1, 2000,  the  Management  Agreement  terminated  and the
               Tribe assumed day-to-day management of the Mohegan Sun.

               Under the Relinquishment Agreement, to compensate the Partnership
               for terminating its rights under the Management Agreement and the
               Hotel/Resort Management Agreement, the Authority agreed to pay to
               the Partnership a fee (the "Relinquishment  Fees") equal to 5% of
               Revenues, as defined in the Relinquishment  Agreement,  generated
               by the  Mohegan  Sun  during the  15-year  period  commencing  on
               January 1,  2000,  including  revenue  generated  by the  Project
               Sunburst expansion (the "Project Sunburst expansion").

               The  Relinquishment  Fees are divided into senior  relinquishment
               payments and junior relinquishment payments, each of which equals
               2.5% of "Revenues". Revenues are defined as gross gaming revenues
               (other  than  Class II gaming  revenue)  and all  other  facility
               revenues. Such revenue includes hotel revenues, food and beverage
               sales,  parking  revenues,  ticket  revenues  and  other  fees or
               receipts  from  the  convention/events   center  in  the  Project
               Sunburst expansion and all rental or other receipts from lessees,
               licensees and concessionaires  operating in the facility, but not
               the   gross    receipts   of   such   lessees,    licensees   and
               concessionaires.  Such revenues exclude revenues generated by any
               other  expansion  of  the  Mohegan  Sun.  Senior   relinquishment
               payments are payable quarterly in arrears commencing on April 25,
               2000,  for the  quarter  ended  March  31,  2000  and the  junior
               relinquishment  payments  are  payable  semi-annually  in arrears
               commencing  on July 25,  2000,  for the six months ended June 30,
               2000,  assuming sufficient funds are available after satisfaction
               of  the  Authority's  senior  obligations,   as  defined  in  the
               Relinquishment Agreement.

Development Agreement

On  February  7,  1998  the  Partnership  and the  Authority  entered  into  the
Development  Services  Agreement (the "Development  Agreement"),  which made the
Partnership the exclusive developer of the Project Sunburst expansion.  Pursuant
to the Development  Agreement,  the Partnership  agreed to oversee the planning,
design, construction, furnishing, equipping and staffing of the Project Sunburst
expansion for a $14.0 million development fee (the "Development Fee").

The first phase of the Project Sunburst  expansion,  including the Casino of the
Sky, The Shops at Mohegan Sun, and the  10,000-seat  Mohegan Sun Arena opened in
September 2001. In April 2002, 734 of the approximately 1,200-hotel rooms in the
34-story  luxury  hotel as well as the  meeting  and  convention  space  and spa
opened.  The balance of the  approximately  1,200-hotel rooms opened during June
2002. As of December 31, 2004,  the Project  Sunburst  expansion was complete in
terms of the Development Agreement.


                                      F-24


<PAGE>

Management Agreement

The Partnership entered into the Management Agreement with the Tribe pursuant to
which the Tribe granted to the Partnership the exclusive right and obligation to
develop,  manage, operate and maintain the Mohegan Sun. The Management Agreement
was amended and restated effective September 29, 1995 (the "Effective Management
Agreement Date"). The Partnership's  obligations under this agreement began five
days after the Effective  Management Agreement Date and were originally intended
to end on October 11,  2003,  seven  years from the opening of the Mohegan  Sun.
Pursuant to the Management  Agreement the Partnership  received a management fee
that was  calculated in three tiers based upon the Net  Revenues,  as defined in
the  Management  Agreement,   of  the  Mohegan  Sun.  The  Management  Agreement
terminated  at midnight on  December  31,  1999.  The final  management  fee was
received by the Partnership from the Authority on January 25, 2000.


Agreements with Partners and/or their Affiliates

Agreement Relating to Development Services

On February  9, 1998,  the  Partnership  and  Kerzner  International  Management
Limited ("KIML"),  entered into the Agreement  Relating to Development  Services
(the  "Development  Services  Agreement Phase II").  Pursuant to the Development
Services Agreement Phase II, the Partnership  subcontracted with KIML who agreed
to  perform  those  services  assigned  to KIML by the  Partnership  in order to
facilitate the  Partnership's  fulfillment of its duties and  obligations to the
Authority  under the  Development  Agreement.  KIML  subsequently  assigned  the
Development Services Agreement Phase II to Kerzner Investments.

Pursuant to the Development Services Agreement Phase II, the Partnership pays to
Kerzner Investments a fee, as subcontractor (the "Development Services Fee Phase
II"), equal to 3% of the development  costs of the Project  Sunburst  expansion,
excluding  capitalized  interest,  less all costs incurred by the Partnership in
connection with the Project Sunburst expansion. At December 31, 2004, all of the
Partnership's  costs associated with the Project Sunburst expansion had not been
paid,  however  reasonable  estimates  of those costs have been  provided for in
these financial statements.  The Development Services Fee Phase II shall be paid
in installments due on December 31, 1999 and 2000 and on the Completion Date, as
defined in the Development  Agreement,  with a final payment being made when the
actual  development  costs of the  Project  Sunburst  expansion  are known.  The
Partnership  pays the  Development  Services Fee Phase II, from  available  cash
flow, if any, in accordance  with the Amended and Restated  Omnibus  Termination
Agreement. At December 31, 2004, the total of the Development Services Fee Phase
II and  the  Partnership's  costs  related  to the  development  of the  Project
Sunburst expansion exceeded the development  services revenue from the Authority
by approximately $15,964,000.

Before KIML  assigned the  Development  Services  Agreement  Phase II to Kerzner
Investments,  it entered into the Local  Construction  Services  Agreement  (the
"Local  Construction   Services  Agreement")  with  Wolman   Construction,   LLC
("Construction")  pursuant to which  Construction  agreed to provide  certain of
those services  assigned to KIML by the Partnership  pursuant to the Development
Services  Agreement  Phase II. KIML  assigned  the Local  Construction  Services
Agreement to Kerzner  Investments.  Pursuant to the Local Construction  Services
Agreement,  Kerzner  Investments  agreed to pay to  Construction  a fee equal to
20.83% of the Development  Services Fee Phase II as and when Kerzner Investments
receives  payment  from the  Partnership  in  accordance  with  the  Development
Services Agreement Phase II.

Construction  has  subcontracted  with The Slavik  Company  to  provide  certain
services under the Local  Construction  Services  Agreement.  In connection with
this,  Construction  agreed that The Slavik Company would be paid a fee equal to
14.30% of its fee under the Local Construction Services Agreement.

Amended and Restated Omnibus Termination Agreement

Effective March 18, 1999, the Amended and Restated Omnibus Termination Agreement
(the "Amended and Restated Omnibus  Termination  Agreement") was entered into by
the  Partnership,   Kerzner  International  Limited  ("Kerzner  International"),
Waterford Gaming, KIML, LMW, Kerzner Investments,  Slavik and Construction.  The
Amended and Restated Omnibus Termination Agreement (i) terminated the memorandum
of  understanding  dated February 7, 1998;  and (ii) effective  January 1, 2000,
terminated  a) the Amended and  Restated  Omnibus  Financing  Agreement;  b) the
Completion  Guarantee  and  Investment  Banking and  Financing  Arrangement  Fee
Agreement (the "Financing  Arrangement  Agreement");  c) the Management Services
Agreement;  d) the Organizational and Administrative  Services Agreement; e) the
Marketing  Services  Agreement;  and f) a Letter Agreement  relating to expenses
dated October 19, 1996.


                                      F-25

<PAGE>

In consideration  for the termination of such  agreements,  the Partnership will
use its cash to pay the following obligations in the priority set forth below:

          (i)  First,  to pay all  unpaid  amounts  which  may be due  under the
               terminated  Letter Agreement and to pay to certain  affiliates of
               Waterford  Gaming and to Kerzner  Investments  a percentage of an
               annual fee of $2.0 million less the actual  expenses  incurred by
               the  Partnership  during  such  year.  Such  annual  fee shall be
               payable in equal quarterly  installments beginning March 31, 2000
               and ending  December 31, 2014.  For the years ended  December 31,
               2004, 2003 and 2002, $1,869,157, $1,840,346 and $0, respectively,
               had been  incurred  by the  Partnership  in  terms  of the  first
               priority;

          (ii) Second, to return all capital  contributions made by the partners
               of the Partnership after September 29, 1995. The Partnership does
               not  anticipate  making  further  capital  calls to fund expenses
               related to the  development  of the Project  Sunburst  expansion.
               From  January 1, 2000 to December  31,  2004 these  contributions
               aggregated $8,000,000.

               From  January 1, 2000 to December  31, 2004  $8,000,000  had been
               repaid to the partners of the Partnership;

               As of  December  31,  2004,  no  capital  contributions  remained
               outstanding;

          (iii)Third, to pay any accrued amounts for obligations performed prior
               to January 1, 2000 under the Financing Arrangement Agreement. All
               such required payments were made during 2000;

          (iv) Fourth, to make the payments set forth in the agreements relating
               to the  Development  Services  Agreement  Phase II and the  Local
               Construction  Services  Agreement as detailed under the Agreement
               Relating to  Development  Services  above.  No such  payments are
               required or due at December  31, 2004.  The accrued  liability to
               Kerzner Investments with respect to such fee at December 31, 2004
               was approximately $414,000;

          (v)  Fifth, to pay Kerzner Investments an annual fee (in the form of a
               priority  distribution)  of $5 million payable in equal quarterly
               installments of $1.25 million beginning March 31, 2000 and ending
               December 31,  2006.  On January 26, 2005 and on January 27, 2004,
               $1.25 million was distributed in terms of the fifth priority;

          (vi) Sixth, to pay any accrued amounts for obligations  performed with
               respect to periods prior to January 1, 2000 under the  Management
               Services   Agreement,   the   Organizational  and  Administrative
               Services  Agreement and the  Marketing  Services  Agreement.  The
               final required payments under this priority were made during
               2001;

          (vii)Seventh,  for the  period  beginning  March 31,  2000 and  ending
               December  31,  2014,  to pay  each  of  Kerzner  Investments  and
               Waterford Gaming twenty-five  percent (25%) of the relinquishment
               payments  as  distributions.  On January 26, 2005 and January 27,
               2004, $13,294,808  ($6,647,404 to each of Kerzner Investments and
               Waterford Gaming) and $12,669,636  ($6,334,818 to each of Kerzner
               Investments and Waterford Gaming),  respectively, was distributed
               by the Partnership in terms of the seventh priority; and

          (viii) Eighth,  to distribute all excess cash. On January 26, 2005 and
               January  27,  2004,  $11,600,000  ($5,800,000  to each of Kerzner
               Investments and Waterford Gaming) and $10,926,597  ($5,463,298 to
               Kerzner   Investments   and  $5,463,299  to  Waterford   Gaming),
               respectively, was distributed as excess cash.


In addition,  the Partnership shall not make any  distributions  pursuant to the
Amended  and  Restated  Omnibus  Termination  Agreement  until  it has  annually
distributed to its partners,  pro rata, the amounts  related to the partners tax
obligations as described in Section  3.03a(1) of the Partnership  Agreement less
twice the amount of all other  funds paid or  distributed  to  Waterford  Gaming
during  such year  pursuant  to the Amended  and  Restated  Omnibus  Termination
Agreement.

To the extent the  Partnership  does not have adequate cash to make the payments
pursuant to the Amended and Restated Omnibus Termination Agreement, such amounts
due shall be deferred  without the accrual of interest until the Partnership has
sufficient cash to pay them.

                                      F-26

<PAGE>

Amended and Restated Omnibus Financing Agreement

Until January 1, 2000, the Partnership's primary source of revenue and cash flow
was  management  fees.  Those  fees were  utilized  by the  Partnership  to make
subcontract  payments to  partners  and  affiliates  pursuant to the Amended and
Restated Omnibus Financing Agreement,  which was terminated effective January 1,
2000.

2. Significant Accounting Policies

Cash  and  Cash  Equivalents

Cash  and  cash  equivalents  represent  cash  and  short-term,   highly  liquid
investments with original maturities of three months or less.

Relinquishment Fees

Revenue  is  generated  in  accordance  with  the  terms  of the  Relinquishment
Agreement and recognized quarterly based upon the Revenues of the Authority.

Development Services Revenue and Cost Recognition

Revenue  generated from services  performed in accordance  with the terms of the
Development  Agreement  are  recognized on the  percentage-of-completion  basis,
determined by the percentage of costs incurred to date to estimated  total costs
for the contract. This method is used because management considers cost incurred
to be the best available measure of progress on the contract.

Costs of development  services revenue  performed include all direct labor costs
and  those   indirect   costs  related  to  services  such  as   subcontractors,
consultants,  supplies,  depreciation  and other costs.  Changes in performance,
requirements  and estimated  profitability  may result in revisions to costs and
income  and  will be  recognized  in the  period  in  which  the  revisions  are
determined. Provisions for estimated losses on uncompleted contracts are made in
the period in which such losses are determined.

Deferred Costs

Costs  associated  with acquiring the  Management  Agreement were amortized on a
straight-line basis over the 84-month period of the Management Agreement through
March 3, 1999. As a result of the Relinquishment  Agreement becoming  effective,
the remaining balance will be amortized over 189 months beginning March 4, 1999.

Property and Equipment

Office  equipment,  computer  equipment and furniture and fixtures are stated at
cost. Depreciation is charged against income over a 3-year estimated life of the
office and computer  equipment and over a 5-year estimated life of furniture and
fixtures.  Depreciation  expense for the years ended December 31, 2004, 2003 and
2002 amounted to $300, $3,303 and $7,641, respectively,  of which $0, $3,003 and
$7,341 were included in the cost of development services revenue, respectively.

Income Taxes

No income tax provision or benefit is recorded on the books of the  Partnership,
as the respective  share of taxable income or loss is reportable by the partners
on their individual tax returns.

Concentration of Credit Risk

The  Partnership's  principal source of revenues and cash flows are the payments
received  and to be  received  pursuant  to the  Relinquishment  Agreement.  The
Partnership  anticipates  regular payments of the  Relinquishment  Fees from the
Authority based upon the operating results of the Authority.

Financial   instruments,   which  potentially   subject  the  Partnership  to  a
concentration  of  credit  risk,  principally  consist  of cash in excess of the
financial institutions' insurance limits. The Partnership invests available cash
with high credit quality institutions.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements,  as well as the  reported  amounts of  revenues  and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

Payments to Partners and their Affiliates

Payments are made to the partners and/or their affiliates in accordance with the
terms of the Amended and  Restated  Omnibus  Termination  Agreement  for certain
subcontracted  services  rendered  and  are  accounted  for as  expenses  of the
Partnership.

Reclassification

Certain 2002 and 2003 balances have been  reclassified  to conform with the 2004
presentation.

                                      F-27

<PAGE>

3. Deferred Costs

Certain  costs  borne  by the  Partnership  in  connection  with  obtaining  the
Management Agreement and the opening of the Mohegan Sun totaling $5,498,941 were
capitalized.  Amortization  commenced  upon  the  opening  of the  Mohegan  Sun.
Amortization  expense for the years ended  December 31, 2004,  2003 and 2002 was
$222,124, $221,518 and $221,518, respectively.

The  Partnership's  estimate of amortization  expense for each of the succeeding
five years and thereafter is as follows:


                 Year Ending December 31,

                        2005                              $  221,518
                        2006                                 221,518
                        2007                                 221,518
                        2008                                 222,124
                        2009                                 221,518
                        Thereafter                         1,108,194
                                                          -----------
                                                          $2,216,390
                                                          ===========





4. Relinquishment Fees

The  Partnership  entered into a  Relinquishment  Agreement  with the Authority,
which  entitles the  Partnership  to receive a  relinquishment  fee of 5% of the
Revenues generated by the Mohegan Sun including revenue generated by the Project
Sunburst Expansion.

For the years ended December 31, 2004, 2003 and 2002, Relinquishment Fees earned
were  $69,101,491,  $65,099,553 and  $58,508,703,  respectively.  The amounts of
Relinquishment  Fees  reported  in these  financial  statements  are based  upon
Revenues  reported to the Partnership by the Authority.  These amounts were paid
by the Authority as follows:

      Date received by the Partnership                              Amount
      --------------------------------                             --------

      April 26, 2004                                            $   8,196,363

      July 26, 2004                                                25,150,422

      October 25, 2004                                              9,165,092

      January 25, 2005                                             26,589,614
                                                                -------------

      Relinquishment Fees earned 2004                           $  69,101,491
                                                                =============



      April 25, 2003                                            $   7,433,160

      July 25, 2003                                                23,635,310

      October 27, 2003                                              8,691,811

      January 26, 2004                                             25,339,272
                                                                -------------

      Relinquishment Fees earned 2003                           $  65,099,553
                                                                =============


      April 25, 2002                                            $   6,228,559

      July 25, 2002                                                20,438,439

      October 25, 2002                                              8,171,882

      January 27, 2003                                             23,669,823
                                                                -------------

      Relinquishment Fees earned 2002                           $  58,508,703
                                                                =============
                                      F-28
<PAGE>


5. Reconciliation of Financial Statements and Tax Information

<TABLE>
<S>                                                      <C>                <C>              <C>
                                                              2004              2003              2002
                                                              ----              ----              ----

            Financial statement net income                $ 66,887,319       $ 62,919,777     $ 55,082,815

            Guaranteed payments to partners                (39,550,748)       (39,941,567)     (55,765,000)

            Financial statement depreciation and
            amortization (greater than) less than tax
            basis depreciation and amortization                    305             (3,028)           1,560

            Percentage of completion accounting
            difference                                         (49,505)        (9,236,479)         991,712

            Other                                                  572             (4,865)          50,093
                                                          ------------       ------------     ------------

            Federal income tax basis net income           $ 27,287,943       $ 13,733,838     $    361,180
                                                          ============       ============     ============

</TABLE>



6. Commitments and Contingent Liabilities

Litigation

On January 6,  1998,  Leisure Resort Technology,  Inc. and defendants  Waterford
Gaming, the Partnership, LMW Investments, Inc. and Slavik Suites, Inc. settled a
prior lawsuit brought by Leisure.  In connection with this settlement,  Leisure,
the Partnership, Waterford Gaming, LMW Investments, Inc. and Slavik Suites, Inc.
entered into a settlement and release agreement. Pursuant to this settlement and
release agreement,  Waterford Gaming bought out Leisure's beneficial interest in
the Partnership.

By complaint dated January 7, 2000, as amended February 4, 2000, Leisure filed a
four count complaint naming as defendants Waterford Gaming, the Partnership, LMW
Investments,  Inc.,  Slavik Suites,  Inc.,  Waterford Group, LLC, Len Wolman and
Mark Wolman (collectively, the "Defendants"). The matter has been transferred to
the complex  litigation  docket and is pending in  Waterbury,  Connecticut.  The
complaint  alleged  breach  of  fiduciary  duties,  fraudulent   non-disclosure,
violation of Connecticut Statutes Section 42-110a, et seq. and unjust enrichment
in  connection  with  the  negotiation  by  certain  of  the  Defendants  of the
settlement  and release  agreement.  The  complaint  also brought a claim for an
accounting.  The complaint seeks  unspecified  legal and equitable  damages.  On
February 29, 2000,  Defendants filed a Motion to Strike and a Motion for Summary
Judgement, each with respect to all claims. The Court granted Defendants' Motion
to Strike in part and  denied  Defendants'  Motion  for  Summary  Judgement,  on
October 13, 2000.  The Court's order  dismissed the claim for an accounting  and
the claim under  Connecticut  Statutes Section  42-110a,  et seq. The Court also
struck the alter ego allegations in the complaint against LMW Investments, Inc.,
Slavik Suites,  Inc., Len Wolman and Mark Wolman.  In a decision dated August 6,
2001, the Court  dismissed all claims against LMW,  Slavik,  Len Wolman and Mark
Wolman.

On November  15,  2000,  the  Partnership  and its  co-defendants  answered  the
complaint.   In  addition,   the  Partnership  and  Waterford   Gaming  asserted
counterclaims  for breach of the settlement and release  agreement and breach of
the implied covenant of good faith against Leisure and its president, Lee Tyrol.
In a decision dated June 6, 2001, the Court dismissed the counterclaims  against
Lee  Tyrol.  Leisure  moved  for  summary  judgment  seeking  dismissal  of  the
counterclaims  in full. This motion for the summary judgment was denied on April
14, 2003.

Fact  discovery  is  completed.  On April  15,  2004,  the  Partnership  and its
co-defendants filed a motion for summary judgment as to all of Leisure's claims.
The Court heard  argument on this Motion on June 23, 2004. In an August 4, 2004,
Memorandum of Decision, the Court granted summary judgment for the Defendants as
to each of the remaining three counts of the plaintiffs compliant. The plaintiff
has appealed this decision.  Defendant's  counterclaims  are stayed pending this
appeal.

The  Partnership  believes that it has  meritorious  defenses and, if necessary,
intends  to  vigorously  contest  the  claims in this  action  and to assert all
available defenses. At the present time, the Partnership is unable to express an
opinion on the  likelihood of an  unfavorable  outcome or to give an estimate of
the  amount or range of  possible  loss to the  Partnership  as a result of this
litigation  due to the  pendency  of the appeal and the  disputed  issues of law
and/or facts on which the outcome of this litigation depends.

                                      F-29

<PAGE>
c) REPORTS ON FORM 8-K


(i) Form 8-K filed on November 18, 2004

     Item 8.01

     (i)  On  November  16,  2004,  the Mohegan  Tribal  Gaming  Authority  (the
          "Authority")   filed  Form  S-4/A,   Amendment   No.  1  to  Form  S-4
          Registration  Statement  under The  Securities  Act of 1933, a copy of
          which has been filed as an exhibit to this report and is  incorporated
          by reference to the  Authority's  electronic  filing of such report on
          Form S-4/A,  Securities  and Exchange  Commission  file  reference no.
          033-80655.



     (ii) On  November  16,  2004,  the Mohegan  Tribal  Gaming  Authority  (the
          "Authority")  filed a copy of a press release on Form 8-K,  announcing
          its operating  results for the fourth  quarter and fiscal year 2004, a
          copy of which  has been  filed as an  exhibit  to this  report  and is
          incorporated by reference to the Authority's electronic filing of such
          report on Form 8-K,  Securities and Exchange Commission file reference
          no. 033-80655.

     Date of Report: November 16, 2004



(ii) Form 8-K filed on December 23, 2004

     Item 8.01

          On  December  22,  2004,  the Mohegan  Tribal  Gaming  Authority  (the
          "Authority")  filed its annual  report on Form 10-K for the year ended
          September  30,  2004,  a copy of which has been filed as an exhibit to
          this  report  and is  incorporated  by  reference  to the  Authority's
          electronic filing of such report on Form 10-K, Securities and Exchange
          Commission file reference no. 033-80655.


     Date of Report: December 22, 2004



(iii)Form 8-K filed on January 20, 2005

     Item 8.01

          On  January  18,  2005,  the  Mohegan  Tribal  Gaming  Authority  (the
          "Authority")  filed Form 8-K,  relating  to the posting on January 18,
          2005,  on its  website  of its Slot  Machine  Statistical  Report on a
          monthly basis for the three months ended  December 31, 2004 and fiscal
          year ended  September  30,  2004, a copy of which has been filed as an
          exhibit  to  this  report  and is  incorporated  by  reference  to the
          Authority's  electronic filing of such report on Form 8-K,  Securities
          and Exchange Commission file reference no. 033-80655.

     Date of Report: January 18, 2005



(iv) Form 8-K filed on January 28, 2005

     Item 8.01

          On  January  27,  2005,  the  Mohegan  Tribal  Gaming  Authority  (the
          "Authority") filed a copy of a press release dated January 25, 2005 on
          Form  8-K,  announcing  that it had  completed  its  acquisition  from
          subsidiaries  of Penn  National  Gaming,  Inc. of the entities  owning
          Pocono  Downs,  a copy of which has been  filed as an  exhibit to this
          report and is incorporated by reference to the Authority's  electronic
          filing of such report on Form 8-K,  Securities and Exchange Commission
          file reference no. 033-80655.


     Date of Report: January 27, 2005



(v) Form 8-K filed on February 7, 2005

    Item 8.01

          On  February  4,  2005,  the  Mohegan  Tribal  Gaming  Authority  (the
          "Authority")  filed a copy of a press release on Form 8-K,  announcing
          its preliminary operating results for the first quarter of fiscal year
          2005,  a copy of which has been filed as an exhibit to this report and
          is incorporated by reference to the Authority's  electronic  filing of
          such  report on Form 8-K,  Securities  and  Exchange  Commission  file
          reference no. 033-80655.

     Date of Report: February 4, 2005

                                       36

<PAGE>
(vi) Form 8-K filed on February 17, 2005


    Item 8.01

     (i) On  February  14,  2005,  the  Mohegan  Tribal  Gaming  Authority  (the
     "Authority") filed Form 8-K, stating;

          (a)  that  on  February  8,  2005,  the  Authority  closed  a  private
               placement  under Rule 144A of the  Securities Act of $250 million
               senior notes due 2013 and $150 million senior  subordinated notes
               due 2015.  The Authority used the net proceeds from this offering
               to repay amounts  outstanding  under its bank credit facility and
               to pay fees and expenses associated with the issuance, and

          (b)  that on February 8, 2005,  the Authority  issued a press release,
               announcing  its operating  results for the quarter ended December
               31, 2004 and held a live conference call available to the general
               public addressing these results,

     copies  of  which  have  been  filed as  exhibits  to this  report  and are
     incorporated  by reference  to the  Authority's  electronic  filing of such
     reports on Form 8-K,  Securities and Exchange Commission file reference no.
     033-80655.

     (ii) On February 14, 2005, the Authority filed its quarterly report on Form
     10-Q for the quarter  ended  December  31,  2004,  a copy of which has been
     filed as an exhibit to this report and is  incorporated by reference to the
     Authority's  electronic filing of such report on Form 10-Q,  Securities and
     Exchange Commission file reference no. 033-80655.

     Date of Report: February 14, 2005


Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities  and
Exchange Act of 1934, as amended,  the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.



                            WATERFORD GAMING, L.L.C.




Date:  March 29,  2005                      By: /s/ Len Wolman
                                            ------------------------------------
                                            Len Wolman, Chairman of the Board of
                                            Directors, Chief Executive Officer


Date:  March 29, 2005                       By: /s/ Alan Angel
                                            ------------------------------------
                                            Alan Angel, Chief Financial Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following persons on behalf of the registrant
and in the capacities indicated on March 29, 2005.




SIGNATURE                                    TITLE


/s/ Len Wolman                               Chairman of the Board of Directors,
---------------------------
Len Wolman                                   Chief Executive Officer


/s/Del J. Lauria                             Member of the Board of Directors,
---------------------------
Del J. Lauria                                Secretary


/s/ Mark Wolman                              Member of the Board of Directors
---------------------------
Mark Wolman


/s/ Stephen F. Slavik                        Member of the Board of Directors
---------------------------
Stephen F. Slavik


                                       37